Cosmetics businesses may not realise that Research & Development (R&D) tax relief on eligible expenses can apply to them.
Carrying out R&D is hugely important for the cosmetics and personal care industries. In this tightly regulated sector, consumer health and safety is a priority.
However, preparing a claim that meets the strict requirements of HM Revenue & Customs (HMRC) can be tricky.
That’s why we provide expert R&D help for accountants to put together a watertight claims process that will minimise the chances of HMRC enquiries.
What activities qualify for cosmetics R&D tax credits?
If you are developing a new material or product, or creating a new manufacturing process, the likelihood is this will involve R&D.
R&D can also apply to efforts to significantly upgrade existing items or methods, and the attempt does not even have to be successful in order to make a claim.
In fact, most R&D work involves some kind of initial failure, unless you are very fortunate or sufficiently skilled to nail the process the first time around.
Examples of qualifying R&D work includes:
- Using new materials to improve product efficacy.
- Designing a more cost-effective manufacturing process.
- Improving the sustainability of products by developing biodegradable packaging.
However, it is crucial to remember that New Product Development (NPD) does not equate to R&D from HMRC’s perspective.
You need to consider the underlying science or technology involved – typically chemical sciences or manufacturing engineering – and make sure a suitable competent professional is involved.
randd uk’s R&D tax consultants can help you understand whether a project qualifies under the scheme.
What costs qualify for cosmetics R&D tax credits?
Examples of qualifying costs include:
- Staff working either directly on the project or directly to support the project – wages, National Insurance contributions, and pension fund contributions.
- Consumable materials.
- Energy.
- Subcontractors.
- Prototypes.
Our specialist R&D tax consultants can help you identify qualifying costs.
How to apply for cosmetics R&D tax credits
Accountants looking to claim R&D tax relief for their cosmetics industry clients need to submit a detailed report outlining their R&D activities, the technological challenges faced, and how the project aimed to overcome them.
Any failures or setbacks should be included (along with the costs incurred) in your R&D cosmetics tax credits claim.
R&D for accountants can be challenging, since most lack the time or specialist knowledge to navigate the complexities of the R&D tax relief scheme.
At randd, we offer accountants R&D assistance with all aspects of the process, from preparing a robust claim to resolving any challenges from HMRC.
Our highly experienced team of consultants has unparalleled breadth and depth of senior-level experience covering a wide range of industry sectors, including cosmetics and personal care.
We have the expertise to identify expenditures you may not think are eligible and can manage the claim on your behalf.
Ready to go ahead with an R&D cosmetics tax relief claim? Contact our specialists today.
