Can manufacturing and engineering companies claim R&D tax credits?

Are manufacturing and engineering companies claim R&D tax credits?

R&D tax relief is a government scheme created to support companies across industries investing in innovation. Manufacturing and engineering companies developing products, processes and services are highly likely to be eligible for R&D tax relief. Whether or not the project is successful, there may still be an opportunity to make a successful claim for R&D tax credits.

Manufacturing and engineering claims

The average size of an R&D tax relief claim for manufacturing and engineering companies is £129,000. The scope of the types of projects that are likely to attract R&D tax relief is intentionally wide. Where a project is aimed at resolving scientific or technological uncertainty or uncovering knowledge that isn’t currently in existence in manufacturing and engineering, there will be the potential for this type of tax relief to apply. The claim could cover a broad spectrum of different costs, including the expense involved in employee wages or subcontractor costs, development or testing that has been subcontracted out, as well as basic costs that relate to the project, from heating and light through to software costs, such as CAD and 3D modelling.

What type of projects qualifies for manufacturing and engineering R&D tax relief?

There is no exhaustive list of the projects that will qualify for this type of support. However, those that have been successful in the past include improving existing construction equipment or developing new equipment, building new or improved heating or air conditioning systems, innovative product development that requires the use of digital design tools, designing innovative manufacturing equipment, developing computer models, evaluating and determining the most efficient flow or materials as well as digitising manual machine processes. These illustrate just a few of the types of projects eligible for R&D tax relief – the scope is very broad.

What kind of activities will qualify?

These are a few of the types of activities that would qualify under an R&D tax relief claim:

  • Carrying out feasibility studies
  • Clarifying and defining technical objectives
  • The process of analysing, designing and developing technology
  • Testing products, software or processes
  • Support activities that have a direct link to the project, from finance training to personnel services
  • Identifying uncertainties
  • The creation of technical specs or other paperwork required to explain or support the project.

How does the claims process work?

The process begins with filing the paperwork for manufacturing and engineering companies looking to claim R&D tax credits. HMRC will look to process applications within a 28-day timeline, depending on the claim’s complexity and the business’s size. Businesses can make a claim for R&D tax relief going back two accounting years.

Engineering and manufacturing companies can claim R&D tax relief – in fact, this type of support is ideally designed for many of the projects undertaken in this sector.

R&D tax credit loans with SPRK Capital

SPRK Capital is a leading lender for R&D tax credit loans, and the manufacturing and engineering industries can also claim and apply for a loan.

Our R&D tax credit loans can support you with access to capital on either an ad hoc or quarterly basis – it’s entirely up to you and what works best for your business. The process is easy, fees are straightforward, and you can even make your R&D funding go further.

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