Labour Costs - Daily Rates
One of the most common areas where we identify clients underclaiming eligible costs is within Labour Costs, and specifically in the calculation of staff daily rates.
Innovate UK’s guidance on eligible labour costs can be found here:
Labour costs can be based on the total cost of employment to the employer. This means that, in addition to a staff member’s gross salary, the following costs are also claimable:
- Employer’s National Insurance contributions
- Employer’s pension contributions
- Life insurance costs
- Other non-discretionary employment package costs
In many cases, we find that only gross salary costs have been included within claims, resulting in an underclaim of eligible expenditure.
Where there is some of the Labour Costs budget remaining, we can advise firms of this so that future claims can be increased accordingly. However, in many cases, the original project forecast was based on the lower calculation, meaning the Labour Cost category has already been fully utilised and no further increase can be claimed.
It is also important to ensure that daily rates are calculated using the correct number of annual working days. For a full-time employee, this is not simply 260 days (52 weeks × 5 days), but rather this figure less annual leave entitlement, including bank holidays. Again, this is an area where we frequently identify understated daily rates.
We have prepared a simple calculator for this area which we can share with you, so if this would be of some help - please feel free to ask.
mailto:info@forumaccountants.co.uk