The role of research and development in the Manufacturing Industry has never been as important as it is today. In a world of interconnected devices and smart factories, the ability of a manufacturer to innovate and adapt to its customers’ requirements is vital.

Manufacturers with constant R&D investments have a higher chance of succeeding in the global market. To attain the best professional advantage, investment in R&D comes hand in hand with processes such as market development and new business processes.

The most successful businesses are always innovating. They are always finding new ways to build up their competitive advantages. R&D is necessary in boosting the vision and objectives of a business, so companies should never be reluctant to take action toward innovation.

R&D is recognised as an important factor in economic growth and balance. R&D can easily lead to highly valued technologies, strategies and designs for your company that could be the origin of potential value when considering sustaining a competitive advantage.

Tax credits

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

Qualified R&D projects allow manufacturers to defray relevant costs with the help of the Research and Development Relief for Corporation Tax. This option allows a business to reduce its tax bill. Small to medium size businesses also get tax credits in cash disbursed by HM Revenue and Customs.

What type of manufacturing projects can qualify for R&D tax credits?

Common examples of product and process development projects that may qualify for R&D tax relief include:

  • innovative product development using computer aided design tools;
  • development of second generation or improved products;
  • tooling and equipment fixture design and development;
  • developing unique computer numerical control programs;
  • designing innovative programmable logic controllers;
  • designing innovative manufacturing equipment;
  • prototyping and three-dimensional solid modelling;
  • development of computer models;
  • designing and developing cost-effective and innovative operational processes;
  • integrating new materials to improve product performance and manufacturing processes;
  • evaluating and determining the most efficient flow of material;
  • designing and evaluating process alternatives;
  • designing, constructing, and testing product prototypes;
  • increasing ease of operation or suitability of manufactured products;
  • developing processes that would meet increasing regulatory requirements; or,
  • streamlining manufacturing processes through automation.

What projects can be included in an R&D Tax Credit claim for manufacturing and engineering projects?

In terms of qualifying tasks, the following activities would be considered eligible for R&D tax credits:

  • defining technical objectives;
  • identifying uncertainties;
  • feasibility studies;
  • reviewing new and competing technologies;
  • analysing, designing and developing the technology;
  • producing technical specification or other documents to explain and support the R&D project and advancement;
  • testing the product, process or software;
  • planning and managing projects.
  • In addition, certain indirect support activities may qualify for R&D tax relief, such as:
  • administration, finance, and personnel services specifically required to support R&D activities;
  • training to support R&D.

How we can help

Finch & Associates’ team of tax advisers are experts in assessing and making claims for R&D Tax Credits on behalf of our clients.  And unlike many specialists in this area, Finch & Associates also advises on many other areas of taxation, so we can advise you on your broader personal and business needs. If you have any questions about these schemes, please call the team on 01275 867350 or send us a message now. Our 5-Step Claim Process is very simple and starts with a no-obligation chat.

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