Whether you run a construction business or work in the industry, there are various tax relief programs and schemes available that you may be unaware of. Investigating your eligibility could reveal that you are paying more tax than is required.
If you are paid each month through the PAYE (Pay As You Earn) scheme, then there may be adjustments available which could see the level of income regarded as taxable, being reduced. If you are required to pay for expenses such as meals or lodgings whilst away on a job, you may be able to claim these costs back against your tax. This is known as the ‘CIS Tax Refund’ and requires that you have a dated list of sites you have worked on, as well as supporting information such as wage slips and any vouchers that have been provided.
There are also reductions available if you have specialist or bespoke work clothing, and are required to launder or repair these yourself. You may be entitled to a reduction in your tax to help offset the cost of doing this.
It is estimated that one in every three construction workers pay too much tax, and HMRC has funds available each year for people to claim back, but due to unawareness of eligibility or even the existence of these funds, they don’t.
There are companies who can assist you with the process of claiming these tax benefits and reliefs should you not wish to undertake the various processes yourself.
One of the biggest ways to save on a company tax bill is through Research and Development (R&D) Tax Credits. This system was introduced between 2000 – 2002 for companies of varying sizes, but many in the construction industry don’t investigate or apply the benefits to their own companies. In fact, according to HMRC (October 2019) around 48,600 claims were made in 2017-18 for the tax credit, but only 4.3% came from the construction industry.
The hesitation to apply mainly stems from the idea that R&D only applies to scientific projects – this isn’t the case, and the definition used by the Government states that the tax applies to ‘scientific and technological’ projects that either bring new knowledge or expand existing knowledge.
Examples of what companies claim
Much of the engineering work done by companies has the potential for falling under the definition for research and development. We have included a few examples below, but this is not an extensive list by any means.
Working on a site is full of challenges both managerial and logistical, it can mean whole new processes or procedures need to be implemented to successfully complete a job. One such example could be that unusual or difficult ground conditions, or unexpected environmental factors, can mean that standard practices aren’t suitable or possibly even viable. When a company has to find new ways to deal with the situation or to adapt existing tools to suit the project, this can be classed as R&D.
Health and safety is always a concern in any industry, and any measures that a company develops to improve current practises may qualify for these benefits.
Developments in Modern Methods of Constructions (MMC) can also fall under the purview of the R&D Tax Credit system, for example – where the work involves advancing the current standard of knowledge within the industry.
Systems such as building information modelling can also come under the credit system when it helps create more efficient ways of working.
How and what to claim
It can be a daunting task trying to discover what you or your business are eligible for, and even making a start can be difficult. However, the potential savings and benefits of applying for these schemes makes them worth pursuing.
We are here to take the complications out of these procedures, offering their services to all industries – helping them assess the work they are doing and see if it is eligible for any of these tax credit schemes. We’ve helped hundreds of companies to make R&D tax relief claims including construction.
Contact your nearest R&D Consultant to see if you can claim – 0800 195 7516