This sector does not traditionally have a large number of claims. There are however missed opportunities where more activities should be classed as research and development, even though businesses don’t realise it. 165 accommodation and food R&D claims were made in 2016-17, totalling £5 million. An example of R&D qualifying activities could be a company in the food sector which conducts experiments to produce a new bread loaf range.

This area covers a broad range of companies which collectively made 2,245 claims totalling £740 million in 2016-17. Examples of business activities in this sector include the development of software which allows for collaborative working, the digitalisation of meeting booking procedures, or the development of online platforms to facilitate HR functions.

An increasing number of companies in this sector undertake R&D to exceed the traditional methods in terms of life expectancy of buildings, durability or robustness. 1,365 claims were made in total in the construction sector in 2016-17 totalling £80 million. An example of an R&D qualifying activity in the build environment would be a company which conducts experiments to iron out technical problems with a block of its new enviro toilet. Or the development of a new or improved online snagging system which captures defects and enables teams to track activities, streamlining the construction and handover phase.

In today’s technological world, innovations are crucial in remaining competitive and improving our how we work. With the emergence of digital media, traditional marketing has become less relevant, and innovative projects have become more apparent, leading to an increase in R&D activities in this sector.

This sector remains very R&D intensive, with 24 per cent of all R&D claims coming from ICT. In total 10,240 claims were made in 2016-17, reaching £685 million. There are a number of opportunities for R&D tax relief within this sector, for example the development of online communications tools which use AI or machine learning, or the use of new and alternative forms of technology to enable wireless communication.

28 percent of all R&D claims were made by the manufacturing sector which remains one of the most intensive sectors for R&D.  In total, 10,115 claims were made to HMRC in 2016-17, totalling over £990 million. An example of supporting R&D activities in this sector includes a company which designs and builds a new method for producing titanium and experimentally tests the new component; or one which finds methods of making their manufacturing process more environmentally sustainable

There was a concentration in the number of claims in this sector accounting for 23 per cent of the total amount of R&D claims made in 2016-17. 7,690 claims were made to HMRC totalling £820 million. An example of a core R&D activity in this area would a biotechnology firm experimentally developing a new biodegradable coronary stent. The activity does not have to be a success for R&D Tax Relief to be claimed.

The DTI Guidelines (2004) make clear that, when to achieve a design objective, a scientific or technological uncertainty within a particular project needs to be resolved for the activity to qualify as R&D. There were however just 150 claims made in 2016-17 in the real estate sector, amounting to £5 million in total. Examples of R&D in this sector include designing a ”green” building; or testing a new, cheaper building material that has come on the market.

This sector is within the top 5 for both the number and value of SME claims made. The total number of claims in 2016-17 was 4,210, reaching £185 million. R&D activities are not limited to client-facing projects. Companies in this sector may have automated their business operations to, for example, manage stock levels or streamline the delivery process. Such activities could potentially qualify for R&D Tax Relief.