A banner showcasing the different types of costs that may or may not be qualified to be included in an R&D claim, such as staff, broadband, subcontractors, utilities, etc.

What is qualifying expenditure in R&D tax credits?

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The R&D qualifying expenditure for tax credits includes the costs of paying people to do the work, paying for the consumables used during the work, and paying for external resources where necessary. Most costs are common to both schemes, with some notable exceptions. Although the calculation of eligible spend can seem straightforward at first, it can very quickly get complicated, which is where WhisperClaims comes in. The system walks you through all of the criteria via a logical and easy to understand set of questions. The report includes a detailed breakdown of the costs, as well as clear totals for eligible expenditure for both schemes.

R&D qualifying expenditure common to all claims


  • Staff costs includes salary, bonuses, employer’s NIC and pension costs
  • Out-of-pocket expenses can also be included, if they relate to R&D projects

Raw materials

  • Raw materials used up, consumed or destroyed during the R&D project can be included
  • Raw materials used to produce goods intended for sale, for example in a trial run of production machinery, cannot be included


  • Heat and light costs can be included, but rent, broadband and other business expenses cannot
  • Software cost related to the R&D projects are eligible

Externally provided workers

Where workers are paid through a third party to provide services related to R&D, a proportion of these costs can be included

Additional qualifying expenditure in SME claims


Payments made to subcontractors to carry out activities related to R&D can be included in the claim.

Additional qualifying expenditure in RDEC claims

Clinical trials

Payments made to clinical trial volunteers can be included in their own category. Other costs, such as payments made to subcontractors running the trials, or raw materials required for the trials can be included in the relevant categories.

Independent research

If a large company makes contributions to independent research carried out by an individual or a qualifying body, such as a university or health service body, these costs can be included in the claim.


Payments made to subcontractors cannot be included, unless the subcontractor is an individual, partnership of individuals or a qualifying body, such as a charity, research institute or health service body.

Common misconceptions about R&D qualifying expenditure

Rent costs can be included

Wrong! Rent costs are specifically excluded. However, if your utilities are parcelled up in your rent payments, you can include a representative proportion of your rent as the cost of utilities.

Broadband costs are eligible

Wrong! Again, these costs are specifically excluded, as nothing is being consumed or used up in your R&D.

No subcontracting costs can be included in RDEC claims

Wrong! Although payments to limited companies cannot be included, payments to individuals, partnerships of individuals and qualifying bodies are eligible under the RDEC scheme.

The costs of initial market research, marketing and commercialisation can be included

Wrong! Although these costs are vital to the process of bringing a new product to market, they cannot be included in the claim as these activities do not contribute to making an advance in science or technology.

How to write an R&D tax relief technical narrative

With HMRC’s new mandatory requirement for project descriptions on all submissions, we wanted to share our experiences to help others to write their best possible technical narratives.

Available to download here.

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