R&D tax credits: integrating preservation with technology

In the architectural sector, the fusion of historic preservation with cutting edge technology presents a unique set of challenges and opportunities. As guardians of our architectural heritage, architects often find themselves at the crossroads of preserving the past and embracing the future. It's in this complex landscape that Research and Development Tax Relief can be a vital tool, not only fostering innovation but also financially incentivising companies to push the boundaries of what's possible.

The Challenge of Modernising the Old

The task of integrating modern technology into historic structures is no small feat. Each building comes with its own set of historical significance, structural idiosyncrasies, and preservation requirements. Whether it's adapting a Victorian era building with state-of-the-art heating, ventilation, and air conditioning (HVAC) systems, using advanced materials for preservation, or implementing digital modelling to recreate historic sites, these endeavours often require innovative solutions.

However, what many architectural firms may not realise is that these challenges often fall within the scope of qualifying R&D activities. The UK government's R&D Tax Relief scheme is designed to encourage and reward such innovative activities, particularly those that resolve scientific or technological uncertainties.

Qualifying for R&D Tax Relief in Historic Preservation

To qualify for R&D tax relief, a project must seek to achieve an advance in science or technology. In the context of historic preservation, this could involve developing new or improved materials that offer better durability or compatibility with existing historical materials. It might also include the integration of modern technology into historic structures in a way that maintains their integrity and aesthetics while improving functionality.

For instance, customising HVAC systems to fit within the spatial and structural constraints of historic buildings, without compromising their architectural integrity, can constitute a qualifying R&D activity. Similarly, using 3D laser scanning and digital modelling to accurately map and preserve historic structures is an area ripe for R&D, combining architectural expertise with advanced technology.

Financial incentives and benefits

The financial incentives of the R&D Tax Relief scheme are substantial, especially for retrospective financial periods where up to 33% of qualifying expenditure can be reclaimed. Qualifying companies can benefit from a reduction in their corporation tax or a cash payment. This relief can be particularly significant for SMEs (Small and Medium-sized Enterprises), where the scheme is currently more generous. The R&D Tax Relief scheme is undergoing a transition to align the benefit of SMEs and large companies for accounting periods starting on or after 1 April 2024. Along with a new requirement to provide advance notification of an R&D claim, it is important SMEs consider their eligibility now to ensure they avail themselves of the higher rates and remain able to claim for their two previous accounting periods.

Moreover, the scope of qualifying expenditure is broad. It includes staff costs, sub-contractor fees, materials, and utilities, among others. This means that a significant portion of the expenditure incurred in innovative historic preservation projects can potentially be reclaimed.

Case studies and success stories

Across the UK, many architectural firms have successfully claimed R&D tax relief for a range of innovative projects in historic preservation. One notable example is a project involving the use of advanced materials to preserve a historic façade while upgrading the building's energy efficiency. Another is the development of a bespoke solution to integrate modern electrical and plumbing systems into a Grade II listed building without altering its visible interior or exterior.

Conclusion

As a regulated accounting practice and being specialists in R&D Tax Relief, Beavis Morgan understands the intricacies of these claims and the immense potential they hold for architectural firms. Their message to architects working on the frontlines of historic preservation is clear: your innovative efforts to balance the old with the new are not just commendable; they are potentially eligible for significant tax relief.

Beavis Morgan encourages companies to explore the possibilities of R&D Tax Relief and engage with specialists who can guide them through the process. By doing so, architects can not only benefit financially but also contribute to preserving our rich architectural heritage through innovative and sustainable practices.

The main approach is centred on adding value and providing a secure framework for your R&D tax claim, while minimising the demand on your time. Our foremost objective is to ensure that your claim adheres to the highest standards of compliance. To achieve this, they prepare a detailed technical and financial report. In an era where HMRC is intensifying its investigations, it’s imperative to have a solid and reliable system for managing your R&D tax claims. The main goal is to streamline the process, safeguard your interests, and optimise the potential benefits of R&D tax reliefs for your company.

For assistance or guidance, please contact our RIBA Business team.