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R&D tax credits: unlocking growth in 2025
Do you qualify for R&D tax credits?
As the UK construction sector continues to evolve, innovation remains at the heart of its growth. From digital construction methods to sustainable building materials, contractors are consistently pushing the boundaries of possibility.
But, with tighter budgets and increasing project complexity, are you leaving money on the table by not fully leveraging available R&D funding?
The latest statistics reveal that construction businesses claimed nearly £800m in R&D tax credits last year, highlighting the scale of opportunity. With changes to the R&D tax credit scheme and updated guidance from HMRC, 2025 offers new opportunities and challenges for firms looking to innovate and thrive.
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The R&D tax credits landscape is shifting, with several key updates to be aware of:
Merged scheme: From 1 January 2025 for December year-end companies the existing RDEC and SME schemes will merge into a single, streamlined regime. For R&D-intensive, loss-making SMEs, they will be eligible for net benefits of up to 27% tax relief on qualifying expenditure.
Contracted R&D: A recent tribunal ruled that businesses can claim R&D tax relief for client-led projects, provided specific criteria are met, overturning HMRC's restrictive interpretation of ‘contracted out’ or ‘subsidised’.
Increased scrutiny: We anticipate increased scrutiny of R&D tax credit claims in 2025, resulting in more enquiries and potential processing delays. Businesses should focus on submitting well-documented and compliant claims to withstand HMRC’s rigorous assessments.
What qualifies as R&D in construction?
Many construction firms overlook R&D tax credits because they don’t recognise their activities as eligible.
However, qualifying R&D could include:
developing new or improved techniques;
trialling innovative sustainable materials or processes;
overcoming technical challenges on bespoke projects; and
implementing or enhancing digital construction tools like BIM.
It’s equally important to ensure claims are accurate and meet HMRC’s rigorous standards. The complexity of R&D tax legislation means errors are common, which can result in rejected claims or even penalties. Robust documentation is critical.
Why act now?
Delays in accessing funding could put your business at a competitive disadvantage. With a growing pipeline of innovative projects in 2025 and beyond, ensuring you’re equipped to claim R&D tax credits efficiently is more critical than ever.
Kene’s expertise in the construction sector is unmatched. It has worked with contractors of all sizes, from SMEs to major players, helping unlock the full potential of R&D funding. As a Chartered Tax Adviser and Certified B Corp, it brings a unique blend of compliance, expertise and ethical business practices to support your goals.
Book your free consultation today.
Don’t let funding opportunities slip away in 2025. Book a free consultation with the team at Kene to explore how R&D funding can drive your business forward.
The November/December 2025 issue of Construction Management magazine is now available to read in digital format.
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