Manufacturing R&D

R&D Tax Credit Examples, Hints & Tips To Maximise Your Benefit
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Manufacturing

Manufacturing R&D is thriving with large capital investment continuing to push innovation in the sector. Take a look at what activity within manufacturing qualifies under the R&D Tax Credits incentive, and what future work you could be conducting to maximise innovation and your future claims.

Manufacturing is one of the largest sectors out there that is undertaking R&D activity (69% of all claims are in manufacturing), so for many manufacturing businesses the incentive is nothing new. However, with HMRC’s everchanging regulations, we’re here to guide you through your claim and unlock new areas to explore to maximise your claim and future R&D.

4 Project Examples

Below are project examples that would qualify for R&D tax credits in manufacturing

Counting King Manufacturing Sector Specific R&D

Development

With heavy digitalisation of machinery, it is common for manufacturers to claim for development instead of research. If you are working on making your current production processes more efficient, you may be eligible to claim!

ERPs

Digitisation is your R&D friend. Many manufacturers use software such as Oracle or SAP which are often customised to your specific project. Those customisations might grant you a heavy tax relief if they advance your field of work in a new way.

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New technology

If you have developed technology and you've done extensive work to implement it to your older system, you can claim for this! You can encounter many obstacles on your way and require experts to support you in this development, this is the definition of R&D!

Counting King R&D Budget Increase

Sustainability

If you have developed a new way of operating that decreases your carbon footprint, you might be eligible under the R&D Tax Credit incentive.

Costs Which Don't Qualify

Sometimes the parts you may think qualify, don’t. Here are some examples of what doesn’t qualify in the manufacturing sector

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Rent

Rent does not qualify for R&D Tax Credits under any circumstance.

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Prototypes

If your company has developed a prototype but you aim to sell it on to a client, you will no longer be eligible to claim R&D expenditure for that prototype.

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Patent Costs

The cost of applying for a patent 'IP intellectual property' is not able to qualify under R&D Tax Credits.

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Purchasing Land

Purchasing land is another cost which will not qualify for the incentive. So for example, if you purchased land to develop the idea the land will not be allowed to be claim for.

Manufacturing Sector R&D Behaviour

Many areas of manufacturing activity where you can find eligible research and development focuses on labour shortages, where companies have developed new systems to reduce the need for manual labour.

The whole industry faces changes in regulations, meaning that the changes you have made to ensure that your business maintains compliance could qualify under the R&D incentive too.

Research and development in the manufacturing sector can prove to be a powerful tool that will enable your company to access additional cash and support your business in its operations. If you require support from experts in this field, you can trust Counting King to give you a competitive edge over other firms in the sector.

Different Manufacturing Businesses

Traditionally, manufacturers are thought of to work with heavy industrial materials however, we are seeing a large increase in R&D activity from businesses working in areas such as clothing and food manufacturing

Counting King Food Manufacturing R and D

Food Manufacturing

Food manufacturing industry is currently on the rise in terms of R&D. With food regulations becoming tighter and a large increase in demand for vegan food and food that is mindful of allergies and intolerances, development to maintain compliance and offer a wide range of new products is eligible for R&D Tax Credits.

Counting King Clothes Manufacturing R and DCounting King Clothes Manufacturing R and D

Clothing Manufacturing

In recent years, the sector has experienced a lot of consumer changes, with trends like the anti-fast-fashion movement surrounding the sector. This resulted in many consumers no longer looking at cheap prices for clothes but instead focusing on environmentally and ethically sourced clothing. Regardless of whether you are an environmentally friendly business or whether you are looking at increasing capacity, both of those objectives are looking at one goal: decreasing the price of manufacturing itself. This is where you will find a lot of your R&D.

How much could you receive in

Manufacturing for your R&D activity?

Use our free calculator today and you could have a significant benefit amount within 28 days!

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Find out how simple it is to claim R&D Tax Credits in the Manufacturing sector 

Start Your Claim With Counting King Today!

Don’t hesitate on starting your claim. The government would like to say well done for your innovate hard work so check if you could be entitled to the money they are offering to support your business. With the Counting King simple process, we will go through if you are eligible and if you are we will go through the process and work out the amount you can claim.  It is a process we are experts in and will take the lead on producing for you.

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Quick Q&A

In short, yes. The best thing to do is to figure out how much R&D you are doing, you should then be able to assign a proportion of your light, heat, water and power that was used for your R&D and amend your claim accordingly. 

One of the biggest portions of claims for the Research and Development tax incentive is circled around staff costs. Whether that might be people directly involved within the R&D or others who might be indirectly involved.

No, you do not need to create a new product to qualify for R&D Tax Credits. For example, if you made an advancement to a piece of machinery that meant you could either manufacture something much quicker or with decreased carbon footprint, those are the kind of costs you could claim for. As long as the amendments are bespoke and improve your whole sector, you can claim for costs incurred during your R&D process. 

In 2020, there were only 475 claims processed by HMRC for the Water, Sewerage and Waste sector, but on average you could receive £52,632 for your successful claim based on current statistics. The whole sector claimed £4.4bn last year so you can really tell that it’s worth putting your claim through. 

Where do we start? You can claim for:

  • Development of new systems
  • New, bespoke equipment development
  • Innovating new packaging options
  • A portion of your utilities bill
  • Subcontractors (up to 65%)
  • Reimbursed expenses

Yes! You are able to claim for unsuccessful projects as this falls under the ‘uncertainty’ you faced during the Research and Development you undertook.

Examples of uncertainty for R&D are;

  • Attempting to fix an issue with machinery that does not meet your manufacturing requirements however being unable to resolve the issue
  • Managing environmental factors, decreasing your carbon footprint during your manufacturing process 
  • If a recipe or cleaning product didn’t work as well as you anticipated and didn’t provide you with what you needed

Find more about R&D in your sector!

Depending on your company size, you may qualify under the RDEC scheme (Research and Development Expenditure Credit) or under SME incentive (Small Medium Enterprises).

Find out more about your eligibility today.

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