R&D tax credits for architects

Can architects claim R&D?

Due to the creative nature of your work, there's a possibility that some of your projects are eligible for R&D tax credits. This could provide your business with a welcome cash payment from HMRC – we typically see R&D claims for architects amounting to 10% - 20% of staff costs.

What types of architectural projects are eligible for R&D tax credits?

The following R&D architects projects could be eligible:

• If you went through various designs iterations and testing to finally achieve the design intent of a façade or interior structure. This might indicate that eligible work was being undertaken.
• If you required the development of new modelling software or application of unusual simulation techniques to implement the design objective.
• If there were uncertainties related to the environment, such as noise or thermal performance of the façade that are specific to the constraints in the development site/location. This might indicate technical challenges had to be overcome.
• If an aesthetic finish was not readily achievable, and this result in product or process development activities being required then this technical work might be claimable.
• If the design intent requires the application unusual techniques or the adaptation of techniques from another sector. It may be that the individual materials used are readily available, but they’re being used in a novel combination. This could result in the work being eligible.
• If you required the development of a new material or process to be able to replicate the design aesthetic of a traditional or historic component this work could be eligible. Additionally, the structural and mechanical properties of a historic structure might be uncertain and work to integrate new systems with this structure might involve R&D into prior building techniques that can be claimed.

What costs can architects include in their R&D tax credit claim?

More than just projects can be claimed. Far too often we find that the R&D claim doesn’t include internal R&D. You could claim on bid work or IT activities. For more information surrounding commonly missed activity in architects' R&D tax credit claims, click here.

The fine line between eligible and non-eligible work causes considerable confusion for architects when preparing an R&D tax credits claim. Get in touch and we’ll help you determine and maximise your claim.

Adding it all up – what’s the benefit?

If your architectural practice is a SME and is profit-making, an R&D tax relief claim will decrease the amount of tax you have to pay. Whereas for a loss-making SME, a cashback payment may be available. The benefit as a proportion of qualifying spend for a profitable business is 21.5% whereas the cashback is up to 19% of qualifying costs for a loss-making business. Businesses that qualify as ‘R&D intensive’ can claim an increased benefit where the cashback is up to 27% of qualifying costs for a loss-making business. 

If your company is considered a large company, an R&D claim will increase the profits within the business at a rate of 20% of the qualifying spend. This credit will then translate into a reduction in tax paid or cash back at a rate of 16% of the qualifying spend. Therefore, this scheme can impact measures such as Earnings Before Interest and Taxes (EBIT) as well as providing a welcome cash injection into the business. From 2024 all non-R&D intensive SMEs will move onto a common RDEC scheme with benefits as per the large company scheme.

How we'll support you

We're here to fully support you with preparing and claiming R&D tax credits.

Our R&D tax team has extensive experience in preparing architectural and structural design projects. We take time to listen to your business to understand the goal you’re trying to achieve within your projects. This means we can help you identify a lot more qualifying spend than you might expect. If we believe that you will be eligible to qualify for R&D tax credits, we will then proactively manage your claim. Our approach will not only minimise the time incurred by you, but also maximises the chances of you obtaining a successful claim in the shortest possible timeframe.

Our flexible approach to fees means we are happy to work on a fixed or contingency basis, which will give you complete transparency as to the cash benefit that the R&D tax credit will have to your business. We are specialists in supporting small to mid-tier architects. We have a detailed understanding of what it takes to start and grow a practice and appreciate the burden of tax and reporting requirements. Our aim is to relieve this burden by providing tailored advice on tax structuring, planning and compliance.

What to watch out for

Many architects will claim for projects where the final outcome is to provide a building design to a client. If the R&D work formed part of the contract with your client, it's likely that this activity will be either directly subcontracted or funded by the third party. In this case, any claim has to be made under the large company scheme. This is a complicated area of the legislation to apply and it has resulted in a number of tribunal cases to test how the rules should be applied. 

Even under the new simplified merged RDEC scheme architecture will be prevented from claiming where work is subcontracted to the architect. Therefore, this aspect of making an architect R&D claim will remain complicated and we can provide advice on how to set up contracts or how to review your work to ensure that the claim is valid.

Other incentives available to architects

Your practice should be looking at all R&D incentives to support you through the business lifecycle. To find out more about these incentives, please click the links below.

Download our R&D tax credit guides

• Are you maximising R&D tax credit claims of your architecture projects?
• How likely is your R&D claim to be queried by HMRC?

Get in touch

If you would like to speak to one of our R&D experts to find out more about how we can help, please get in touch via the form below or call +44 (0)20 7710 3330.