If you’re considering whether to bring some or all of your R&D project work inhouse versus outsourcing it, you’ll want to feel confident that you are making the right decision for your business operationally, but also to maximise your R&D claim.
Before you make any decisions, there are some key points to consider, to determine the best way to incur your R&D development costs; in-house or outsourced.
Only 65% of costs can be claimed….
If you are a business undertaking an R&D project for your own business, and you have sub-contracted part of the R&D project to a third party, you can only claim for 65% of those costs.
To be clear the R&D work must be for a specific part of the project.
You may not be able to claim if you are a subcontractor
If your business is acting as a subcontractor, you may not be able to claim under the SME R&D Scheme at all. However, you may qualify under the RDEC scheme, and be able to claim at 10.53% of qualifying expenditure. But when claiming under the RDEC scheme, you can’t claim for work you have subcontracted to third parties.
Should I outsource my R&D activity or keep it in-house?
When it comes to the numbers, the tax saving is more attractive if you go down the in-house route. However, taking on a new employee is a big call to make, as it comes with its own challenges. There’s the cost and time involved in finding the right person, with the right skillset, that will fit into the business. It’s a significant commitment.
For a more detailed look at the numbers check out the blog below.
Should I outsource my R&D activity or keep it in-house?
We’ve included some worked examples of the tax savings involved, and a list of pros and cons, to help you decide – should I keep my R&D in-house or outsource?
YOUR R&D CLAIM
We’ll always work with you to ensure you are doing everything reasonably possible to maximise your R&D Tax Claim, but when it comes to decisions about outsourcing you need to decide what is right for your business.
If you haven’t already, make sure you have a call booked in to scope out your next R&D claim, it’s better to be prepared. Call on 01752 752210 or email support@marclawson.co.uk .