Dividends, salary, and bonuses – what can I claim in my R&D tax relief?

You can claim a range of payments for you and your staff, but there are some exceptions.

When you make a claim for tax relief via the Research and Development scheme you are claiming on behalf of the company, and the costs that it has borne in undertaking the R&D.

Some of these are obvious – like the parts used in making a prototype. Some are less so, like the complex subcontracting rules (see my last blog), or types of pay and how much of those costs to add to the claim. 

Full-time salaried staff and their eligibility

You’ll be able to claim on the taxable salary of someone working on the R&D, plus anything that the company pays into a pension for that employee.

You can also claim the Employer’s National Insurance contributions, but you can’t claim the employee’s N.I. or their personal contributions to their pension. You can claim bonuses too, as they are taxable. 

Expenses and Benefits In Kind

This area is a surprising one, as you can’t claim expenses paid for by a company credit card, but you can claim for expenses paid by an employee and then repaid by the company to the employee.

Don’t forget, of course, that the expenses have to be directly related to the R&D itself; as an example, a market research trip to a trade show is not R&D. Non-cash Benefits In Kind (like cars or accommodation) cannot be claimed.

Directors pay and the R&D claim

Directors paid by salary fall under the same category as other full-time salaried staff, with the same restrictions. Dividends, however, cannot be claimed, and this can impact on claims, especially for smaller companies.  

How much of each person’s costs can I claim? 

This isn’t an easy question to answer, sorry! It will vary based the involvement of each person.

Interested in talking to a R&D Tax Advisor about your potential claim?

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