Manufacturing and Engineering

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.

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.

You can claim relief on costs that have been expensed through the Profit & Loss account and in certain circumstances you can also claim capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets). The main areas of costs that can be claimed are:

• staff costs (gross pay, employer's NI, employer's pension contributions, and reimbursed expenses relating to R&D activities);
• agency workers (externally provided workers);
• subcontractors/freelancers;
• software license costs; and,
• consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process).