Making The Most Of R&D Tax Relief For Manufacturing Businesses

Research and Development (R&D) tax relief can transform the way your manufacturing business operates, by providing financial incentives for investing in innovation. For businesses keen to enhance their research and development to achieve growth, R&D tax credits are an invaluable way to inject cash into the organisation and address some of the challenges facing manufacturers today. In this article, we discuss how R&D tax relief works, who is eligible, and how you can make the most of the scheme. How Does R&D Tax Relief Work? Developing new products or processes and improving current ones is fundamental to success in manufacturing. Businesses who doggedly stick with so-called tried-and-trusted techniques often find that they are overtaken by their competitors who can produce superior quality goods for a lower price and in a quicker time. By investing in process improvements and innovation, eligible businesses can submit an R&D tax credit claim for a reduction in corporation tax or a cash payment. While R&D tax credits are available for a wide range of sectors, they are especially well-suited to the manufacturing industry because it invests heavily in innovation – particularly within SMEs. R&D tax relief is available for the last two accounting periods if you are claiming it for the first time. Who Is Eligible For R&D Tax Relief? To qualify for Research and Development tax credits, manufacturing businesses must: Be registered as a UK limited company that pays Corporation Tax (CT). Have conducted qualifying research and development and Have invested money in R&D projects. Documented the costs and time associated with the R&D activities. What Can You Apply For – In Plain English! The process needs to be that you: - Looked for an advance in science and technology – including an improvement to, or expansion of, existing technology. Had to overcome uncertainty. How you tried to overcome this uncertainty. Could not be easily worked out by a professional in the field i.e., is not already proven/known. And the projects do NOT have to be successful to include them! How Can You Make The Most Of Your R&D Tax Relief? While any cash payment or reduction in CT will benefit your business, R&D tax relief is most effectively used to combat some of the specific challenges facing the manufacturing industry. This includes, but is not limited to, investing in innovations that: Manage supply chain disruptions to reduce lead times and ensure that customers’ orders can be fulfilled quickly. Address labour shortages, thereby boosting productivity and securing your business’s place in its sector. Achieve greater operational efficiency to improve product margins and cut costs. Invest in green technology, to reduce demand on fossil fuels, reduce energy expenditure, and improve your reputation as a credible eco-friendly business. Speak To Us If you’d like to find out more or join the conversation about R&D in the UK manufacturing sector, feel free to connect with me on LinkedIn, Andrea Wilson or send us a message through our website!