Increase Your R&D Tax Credits Claim with Reimbursed Travel Expenses

Travel expenses are often left out of R&D tax credits claims due to common mistakes. Here's everything you need to know.

Startups and scale-ups incur thousands of pounds worth of travel expenses related to research and development every year

For example, using a company debit or credit card for employee travel expenses immediately disqualifies this expenditure from being allowable in an R&D tax credits claim. However, by processing expenses, such as travel, airfare, subsistence, and hotel costs, as reimbursements, you’re able to include them in your R&D claims. 

Eligibility requirements 

For expenses to be eligible, HMRC states they must have been first paid directly by the employee and then later reimbursed by the company. These costs could potentially increase your R&D tax credit claim amount by thousands of pounds.

To include these expenses in your R&D tax relief claim, you need an established process for categorising fees related to attending meetings, travelling to and from different locations, meals, subsistence, taxi fare, and other travel-related costs.

Maximise research and development tax credits

Here are a few simple things you can do to maximise your R&D tax credits claim.

Create an expense policy

By implementing an expense reimbursement policy, businesses can easily categorise qualifying expenses. Having this policy in place will help organise the necessary documents to support your R&D tax claim in a more efficient manner.

Most importantly, make sure all expenses are initially paid by the employee—from their personal bank account or credit card—and then later reimbursed by the company.

Accounting software, like Xero or Quickbooks, which offer expense management tools, helps organise qualifying reimbursements and expenses. 

RDvault easily integrates with online accounting applications to help you build your R&D tax credits claim quickly, factoring travel and subsistence expenses into your claim.

Outline a detailed description of qualified reimbursable expenses

Ensuring that your employees know exactly what expenses can be reimbursed will keep your accounting records accurate and organised.

You’ll need to review each employee request for reimbursement to ensure they are categorised correctly and eligible as part of your R&D tax credit claim. 

Detailing the exact description of expenses allowed for reimbursement also proves your compliance with HMRC guidelines regarding staffing costs (HMRC Manual CIRD83200).

Making an R&D tax credits claim

When you make an R&D tax relief claim, you’ll need to internally organise all of your documents, including reimbursed expenses, to support your credit amount.

To qualify under an R&D claim, an employee must first be reimbursed for any expenses they originally paid for. Expenditures paid directly by the company, whether through a company credit card or direct business bank transfer, cannot be classified as staffing expenses for R&D tax credits purposes..

HMRC advises:

• The expense constitutes an expense to the company of employing staff, and
• The expense is an expense the employee pays in order to fulfil the requirements of her employment.

Example: qualifying R&D travel expenses

Thomas travels frequently between London and Los Angeles, at least three times per year, to meet with their R&D team.

His hotel is booked through the company credit card and costs £1,500.

This is not a qualifying expense for R&D tax credits purposes. If he had paid with a personal credit card and was later reimbursed by the company, the expense would be counted toward an R&D tax credit claim.

Thomas pays for his own food and drink when with the team and spends £180.

This is an R&D qualifying expense as he paid out of pocket and was reimbursed by the company upon return.

While in Los Angeles, Thomas hires a meeting room which costs £200.

This is not a qualifying expense as the use of the meeting room is not relative to the cost of employing staff, and it’s not related to the employee’s travels.

Had Thomas paid for the hotel with a personal credit card and then filed for reimbursement with his employer, the total eligible amount in an R&D tax claim would be £1,680.

Instead, only £180 qualifies as an eligible expense.

RDvault streamlines the process

By using RDvault’s proprietary R&D tax credit software, you can sync your expenses directly from your accounting software. 

We use a simple questionnaire to compile the documentation necessary, with our platform syncing with live financial data to produce a ready-to-file claim to HMRC. For more information about your R&D qualifying expenses, or advice on your claims, get in touch today.