As the impact of climate change continues to be felt around the world, many of us may be considering how to reduce our carbon footprint.
The UK Government has committed to be a wholly net zero nation by 2050.
On the road to that goal, the Government desires a 45 per cent reduction in carbon emissions by 2030.
Given that that is now less than five years away, it may be worth considering how to work towards this goal using R&D tax relief funding.
While some may consider the work of carbon neutrality to fall upon those in the science and technology industries, the reality is that all sectors can benefit from a greater push towards sustainability.
If your client in innovating processes to make either their systems or their products more sustainable, then it could be worth filing an R&D tax claim for the work conducted in this endeavour.
What could be eligible?
HMRC determine the eligibility of R&D claims based on four key criteria:
- The advance is significant in the sector.
- It cannot be readily deduced by a competent professional.
- There was some degree of technical uncertainty.
- Work was conducted on the project during the financial year.
This may open a number of exciting avenues for your client.
As the advances are determined sector by sector, any efforts to improve sustainability may become eligible under the R&D tax relief programme.
For example, if a company manufactures clothing and finds a way for an environmentally sustainable fabric to perform as well as or better than less environmentally sustainable materials, this could constitute an advance.
Similarly, measures taken to reduce the cost of sustainable products or processes may be eligible provided they meet the four criteria.
As all industries have historically been plagued with inefficiencies and unsustainable practices, exploring a move towards net zero could be considered an advance in the sector.
Remember, projects need not be successful.
So long as a concerted, reasonable effort was made to overcome the technical uncertainty, then the project may still be eligible for consideration as part of R&D tax relief.
As the net zero deadlines get closer, it can be expected that more companies will work towards this goal.
If you are currently working with a client who is leading the charge on this front in their sector, it is worth ensuring they receive the financial support they need.
Need assistance educating your clients on their eligibility for R&D tax relief? Contact us today!
