How the building and construction industry can benefit from R&D Tax Credits
How the building and construction industry performs is often used to measure the health of a country’s economy.
The good news is that recent research suggests that the UK’s construction market is expected to hit £168.60 billion in 2026, with a compound annual growth rate of 3.8% from 2026-30, reaching approximately £204.12 billion by the end of 2030.
So, after several sluggish years, there is now some hope that growth is being driven by the UK government’s investment plans for housing and infrastructure, along with greater demand for sustainable and energy-efficient buildings, which are needed for both commercial and residential developments.
But there are still big challenges facing the industry, with a shortage of skills, rising costs and conflict in the Middle East all threatening construction projects across the UK. These challenges mean that it’s more important than ever for innovative companies working in construction to take advantage of the government tax incentives that are available, like R&D Tax Credits.
What is R&D in the building and construction industry?
For tax purposes, R&D in the building and construction industry is classed as any project that seeks to resolve uncertainty through a scientific or technological advance through invention, improvement, or discovery.
Groundbreaking innovations that make such advancements are happening within the construction industry all the time, from low-carbon bricks to using AI to construct detailed 3D scans of objects in the built environment.
And there’s evidence of plenty of R&D taking place, with HMRC statistics revealing that the construction industry makes 7% of all R&D Tax Credits claims in the UK, spending 5% of all eligible R&D expenditure (£2,280M), and claiming 5% of all R&D tax relief support (£365M).
Below, we highlight different examples of qualifying research and development projects, including case studies and examples from HMRC, to show how innovative businesses working in construction can qualify for R&D Tax Credits.
What costs can you claim on a building and construction R&D project?
Claiming R&D Tax Credits can be hugely beneficial for companies making cutting-edge advances in construction. If your project qualifies, you can claim a tax credit on eligible expenses such as:
- Staff costs
- Consumables
- Software and data licenses
- Cloud computing costs
- Other forms of expenditure related to research and development
You can find out more by downloading our Complete Guide to R&D Tax Credits.
Examples of R&D projects in the building and construction industry
To qualify for R&D Tax Credits your work must seek an advance in a field of science or technology, which includes sectors like construction, architecture and civil engineering. Examples of construction projects eligible for relief include:
- Reducing project time through developing a new innovative technique.
- Developing a unique solution to overcoming a construction obstacle or challenge.
- Synthesising a new, more sustainable, building material.
- Developing a strengthening solution to support aged buildings that are being repurposed.
- Designing, installing and testing new and unique security systems.
- Developing new or substantially improving specialist construction equipment.
- Creating and testing a new way to treat contaminated land for reclamation.
HMRC’s guidelines on qualifying R&D activities specifically cite example construction projects to help businesses understand what counts as eligible R&D for claiming tax relief. These include:
- A company that develops an appreciably improved method of surveying for a high-rise building by adapting remote sensing technology normally used for archaeology and then combining it with data analysis software from the oil industry.
- As part of the same project, access restrictions and the results from the ground survey mean that a standard method of construction can’t be used. Research takes place, but no solution is found so a new temporary cantilevered structure is developed. During construction, further design is needed to overcome uncertainties.
- In a separate example, a company makes improvements to the concrete printing process by developing new additives and testing them on a construction site to solve technical challenges outside the lab. Extra security is employed to specifically guard the project equipment and materials used as part of the R&D. In this case, the security costs can be claimed as well as the R&D work as their role directly supports the R&D project.
Building and construction R&D case studies
We have several client case studies that show further examples of how building and construction projects can qualify for R&D tax relief, including:
- FRONT: Developing innovative solutions for complex projects, including conversions and alterations within listed buildings, as well as major new-build developments that have unique site constraints.
- Renewable innovation in historic buildings: Applying cutting-edge renewable technologies within historic buildings to preserve heritage status while driving towards net zero.
- MPN UK Limited: Researching and testing new ways of converting, reusing, and repurposing existing buildings to avoid demolition and rebuilding, while maximising the value of the building.
- Gerco Fas: Creating innovative new ways to meet stringent regulations while collecting different kinds of information from testing fire protection systems, such as gathering data on lateral movement in building design.
- Manalo & White: Researching and developing innovative irrigation techniques, as well as examining the structural integrity of developments and investigating the possible impact on ecosystems.
How Leyton can help
Partnering with Leyton UK can help you to take the risk out of your R&D projects, allowing you to invest in innovation to support your future growth plans.
We have a team of consultants focused on helping construction companies claim R&D tax relief. They have specialist industry expertise, which allows them to dig into the details of projects to help find eligible activities for R&D Tax Credits. With their support, you can maximise your claim while making sure it’s fully compliant with HMRC’s strict rules.
Are you working on innovations within the construction industry? Get in touch to learn more about how we can help.
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