Manufacturing and Engineering

What are R&D Tax Credits?

The R&D Tax Relief incentive is designed to encourage innovation and increase spending on R&D activities for companies operating in the UK. It’s one of the government’s top incentives for encouraging investment in research and development and allows up to 33.35% of a company’s R&D spend to be recovered as a cash repayment.

HOW TO CLAIM R&D TAX CREDITS IN ENGINEERING EBOOK

What type of manufacturing and engineering 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.

What R&D expenditure can be claimed for manufacturing and engineering projects?

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).

What staff roles can be included in an R&D Tax Claim for manufacturing and engineering projects?

It is not uncommon for an R&D team to consist of many individuals from different parts of the business. Your R&D project team may include the R&D Manager, a Lead Developer, Engineers, Project Co-ordinators, Quality Control and Testing specialists, and Cost Accountants, as well as members of the senior management team.

At Myriad Associates, we've had the opportunity to provide R&D Tax Credit claim services for some of the UK's most innovative manufacturing and engineering companies.

Charpak Limited

For almost 30 years, Charpak has been a market leader and innovator of vacuum-formed packaging.

Charpak have developed thermo-formed packaging products for all market sectors worldwide as well as specialising in packaging for food and pharmaceutical products.

Charpak’s specialist team work on initial concepts through to the finished product, offering design, prototyping and production of its packaging products.

Myriad Associates prepared detailed and very accurate technical reports which meant my input and time was kept to a minimum. Their manufacturing knowledge and experience was evidenced by the quality of their technical reports.

Gary Smith, Technical Director, Charpak Limited

N.D. Precision Products

Craigen Engineering Ltd, trading as N.D. Precision Products, are manufacturers of high precision tooling from concept design to prototyping across all sectors.

Myriad managed our R&D tax credits claim from start to finish, significantly reducing the time we spent when working with our previous R&D Tax Consultants, as they were able to complete the technical side of the claim.

Emma Ker, Finance Manager, N.D. Precision Products

Cleaver Scientific Limited

Cleaver Scientific is a UK based electrophoresis equipment supplier who provide premium and technically enhanced high-specification, low-cost electrophoresis equipment for the world market.

It was clear that Myriad Associates were not just very knowledgable about the R&D Tax Relief Scheme, they also made it their business to understand our technology, process and business costs model.

Adie Cleaver, Managing Director, Cleaver Scientific Limited