Quick answer: Consumables are materials, fuel, water and power used up or transformed during a qualifying R&D project, such as chemicals, prototype materials or utilities. They are a qualifying expenditure category, but items that become part of a product sold to a customer are excluded under the consumables-in-products rule.
What counts as a consumable for R&D purposes?
Consumables, for R&D tax relief purposes, are materials and utilities that are consumed or transformed during a qualifying research and development project. Typical categories include raw materials used in prototype construction, chemicals used in laboratory trials, fuel used in pilot plant operation, and electricity, gas and water used in R&D processes. Consumables that become part of a product sold to a customer are not qualifying expenditure, following the change introduced by Finance Act 2015.
How does HMRC define consumables?
HMRC guidance on consumables is at CIRD82300 and CIRD82400 of the CIRD Manual. The legislation is at section 1126 of the Corporation Tax Act 2009. CIRD82400 sets out the consumables-in-products rule, under which items incorporated into a saleable prototype transferred to a customer are excluded, unless the customer acquires the prototype only as a by-product of the R&D process.
What do consumables look like in practice?
A materials science company spends £50,000 on specialist alloys used to build test coupons during a qualifying R&D project. The coupons are destroyed in mechanical testing. The £50,000 is included in the consumables category of the claim. Had the coupons been delivered to a paying customer as finished components, the expenditure would be excluded under the consumables-in-products rule.
Worked example: consumables inside a full claim
Consumables typically sit alongside staff costs, externally provided workers and data or cloud costs in the same claim, not as a standalone line. For a manufacturing SME with £900,000 of total qualifying expenditure - £550,000 staff, £200,000 consumables (including the £50,000 of alloy testing above), and £150,000 data and cloud costs - the merged scheme's 20% credit produces £180,000 before tax, comfortably above the 2023-24 average SME-scheme claim of roughly £85,400 (HMRC: £3.15bn of relief across 36,885 SME-scheme claims).
Consumables vs capital equipment
Consumables are revenue costs used up during the project; a permanent piece of lab or test equipment is capital expenditure and falls outside the consumables category, though it may separately qualify for Research and Development Allowances. Getting this split right matters most for biotech and materials-science claimants, where prototype builds mix single-use test materials with reusable rigs - see prototype costs for how HMRC treats the finished item itself. Claimants sometimes assume all raw materials automatically qualify; in practice HMRC scrutinises whether the specific batch was consumed in a genuinely uncertain trial or simply used in standard production runs dressed up as testing, so keeping a batch-level log of what was destroyed, and why, materially strengthens the claim. A well-kept consumables log - batch reference, quantity, destruction or disposal method, and the specific test it supported - is usually the single fastest piece of evidence to produce on enquiry, since it ties a cost figure directly to a dated experimental record rather than a retrospective estimate.
Related terms
Frequently asked questions
No. Software is its own qualifying category (see Software (R&D Claim)), with different apportionment rules from physical consumables and utilities. Use the free eligibility calculator to see how consumables and other cost categories feed into an indicative claim value.
Items incorporated into a saleable prototype transferred to a customer are excluded from the consumables category, unless the customer acquires the prototype only as a by-product of the R&D process.
A batch-level log recording the batch reference, quantity, destruction or disposal method, and the specific test it supported is usually the fastest piece of evidence to produce on enquiry.
No. Consumables are revenue costs used up during the project, while a permanent piece of lab or test equipment is capital expenditure that falls outside the consumables category, though it may separately qualify for Research and Development Allowances.