Claiming R&D tax credits for your manufacturing business

UK manufacturing is an innovative sector, making advances in manufacturing processes and products in response to the ever evolving and increasing market demands. 

According to HMRC’s Research and Development Tax Credits Statistics, the total number of claims for R&D tax credits for 2017-18 was 62,095, an increase of 17% from 2016-17.

There are still many manufacturing and engineering businesses not benefitting from the possibility to significantly boost profit margins through R&D Tax Credits.

What are R&D Tax Credits?

First introduced in 2000, R&D tax credits are designed as tax relief to encourage innovation and increase spending on R&D activities for companies operating in the UK.

R&D Tax credits allow profitable SMEs to recover up to 43.7% and loss-making SMEs are able to recover up to 33.35% of qualifying R&D expenditure as a cash repayment or Corporation Tax reduction. 

Making R&D tax relief a valuable source of funding.

Would my business be able to claim R&D Tax Credits?

R&D relief isn’t just available to pharmaceutical, technological companies making medical and technical advances, in fact 70% of all R&D tax is currently claimed by the manufacturing sector.

If your company is in the manufacturing or engineering industry and you've recently introduced new or improved products or manufacturing processes, there’s a likely chance that your business could benefit from an R&D Tax Credit claim.

• Are you a UK Ltd Company subject to corporation tax?
• Do you employ skilled or technical staff?
• Have you spent money on qualifying projects?

Which Manufacturing and Engineering projects qualify?

There’s many projects within the manufacturing and engineering sectors that qualify for R&D tax relief. 

Many businesses dismiss qualifying projects as a routine day to day task that is already performed by the business.

Examples of qualifying projects include;

• New product designs
• New materials for sustainability
• Tooling and equipment fixture design
• Increasing speed and efficiencies of processes
• Scaling up of production processes
• Weight and size reductions of parts and components
• Integration of new technology with old systems
• Developing new software for internal or external use
• Design tools such as jigs, moulds and dies

Do your R&D activities improve the following?

• Performance
• Function
• Reliability
• Quality

Will your research eliminate uncertainty?

A good way to determine if the work undertaken qualifies as R&D tax credits, is whether your project team faced uncertain outcomes at the beginning of the project. If so you may be eligible for a claim.

This uncertainty can apply within any of the following project areas:

• Invention
• Function
• Product
• Formula
• Software
• Processes

R&D takes place in every sector

Here’s just some of the sectors that claim R&D:

Would you like to know more?

We are here to help with any questions you may have around R&D tax credits. Please feel free to contact our team to find out more.