UK construction, already among the country’s most aggressively innovative industries, is well placed to lead by example. It needs to do it, too. Globally, the construction sector eats up around 40% of both raw materials and energy production. Around 13% of products and as much of a third of all materials delivered to building sites end up discarded. Looking at the UK built environment as a whole, we see that it accounts for 45% of our carbon emissions, while 32% of landfill waste comes from either construction or demolition projects. Clearly, there’s room for improvement – but there’s ambition for it, too.
Sustainable construction is, quite rightly, a huge topic right now. Businesses across the sector are finding ways to reduce energy consumption and environmental impact, leaning into renewable resources and recyclable materials. It’s demanding work, and carries all the risks usually associated with innovation. Cost-effectiveness is a significant challenge in an industry where margins are often squeezed, and it can be tough to see the big picture when you’re tightly focused on day-to-day survival. UK construction has risen to the challenge by innovating at every level, from recycled bricks and prefabricated components during construction to ensuring buildings are energy and resource efficient in actual use. Building Information Modelling (BIM) techniques are boosting productivity, while building lifespans are being enhanced and alternative materials developed. On-site power generation is gaining momentum, and new plumbing systems are cutting down on water use.
All of this ambitious innovation requires investment, work and commitment. That means the pressure’s on to make the process of “greening” construction simpler, less risky and more cost effective. Schemes like the CRC Energy Efficiency Scheme and the Climate Change Levy are designed to encourage businesses to become more environmentally friendly, but the real incentive comes when you make the process of innovation itself more attractive. The Research and Development Tax Credits system is already the largest reward and incentive scheme of its kind. Depending on the size and type of business claiming, the benefits range from a tax credit worth 12% of eligible expenditure to an extra 130% deduction of qualifying R&D costs from taxable profits. To qualify, projects need to be attacking a technical problem through innovation, pushing back the boundaries of what we know or can do. In terms of developing sustainable methods, materials and products, R&D Tax Credits are custom-built to make these essential innovations easier and less risky.
The challenge now is to demonstrate how increasing sustainability benefits construction – not just in some bright future but right now. The construction industry critically under-claims on R&D Tax Credits, with only around 3% of total claims coming out of the sector. The gears are definitely moving in the right direction, and at an accelerating pace. Even so, with that 2020 deadline already here, there’s still work to be done in getting the incentives and rewards flowing into construction.
Get credit for your business innovation with research and development tax credits claim assistance from RIFT. Find out more about R&D tax credits for the construction industry, deep dive into the world of business innovation with our insights, or contact RIFT R&D today to find out how we can maximise your benefits.