Which business expenses can be included in an R&D claim?

Some types of staff expenses can be included in your R&D tax credit claim. In order to determine whether the expense can be claimed for, we apply the following criteria:

1. It’s a staff cost
2. It’s a reimbursed expense.
3. It’s related to the R&D

This criterion requires that the cost is related to the employment of the staff member and not only claimed by a staff member. For example, if a staff member buys some materials for a prototype, that would not count as a business expense and would instead be classified as a consumable in your R&D claim.

The cost must first be taken by the staff member to count as a qualifying staff cost for your R&D tax credit claim. If the expense was paid initially by the business then it would not count. This is important because something like travel to a feasibility study meeting is not claimable elsewhere in the R&D claims process unless it’s first been paid by the employee.

The expense needs to relate to the cost of delivering qualifying R&D activities. For example, your employee pays train fares to attend two different meetings:

1. A meeting to plan a new research project
2. A board meeting

Only the travel to the first meeting would qualify, as the second meeting will inevitably include discussions related to other aspects of the business beyond their R&D activities.

We therefore typically claim for the travel and subsistence expenses that relate to the R&D. So if one of your staff engineers travels abroad to attend a meeting to discuss the research timeline for a new product’s development, then the travel and basic accommodation and food expenses can be included. HMRC has additional examples in its R&D Manual which can provide more clarification if needed.

For the full breakdown of the R&D costs that can be included in the R&D claim then it’s worth consulting our guide to qualifying R&D costs.