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.

For more information on Making The Most Of R&D Tax Relief For Manufacturing Businesses talk to Hone-All Precision Ltd