Manufacturing businesses will have heard the words R&D tax and paid some interest. But when it comes to assembling a claim, many back away. It looks and feels complex. A lot of manufacturing businesses struggle to define the projects that are deemed eligible for R&D tax. Often the best way to do this is to separate them into products, processes and computing. Here is a breakdown of some of the most common projects which are considered R&D manufacturing.
If you are a manufacturing business, then you will want to know R&D tax but in simple terms. That’s what this article is designed to do. The manufacturing industry is crucially important to the UK economy. That’s why the government have made R&D tax credits simple to claim. Here’s all you need to know.
R&D Tax Credits for Manufacturing Businesses
Put simply, R&D tax credits are there to reward those manufacturing businesses (and others as well) that have taken a commercial risk. This can come in many forms, such as –
- Developing a new product
- Improving an existing product
- Changing the makeup of a product
- Altering the processes used
- Reacting to changes in legislation
And we all know that manufacturers do this all day long. With this in mind, R&D tax credits are perfect for the manufacturing sector. But, in order to out in a claim, you need to know where to start. That’s why it is easier to break it down into products, processes and computing. Let’s dive deeper.
R&D Tax Credits: Products
As a manufacturing business, the core of what you do will most probably be linked to products. Whatever you make will have had to go through a series of decisions to get to where it is today. The idea was at the beginning but to bring that idea to fruition takes research and development at every stage.
And even when the product is live, there is R&D in what you do. Making a product better or changing the raw materials isn’t just a case of making a decision and it happens. You need to know so much to embed a change. This is why the UK government is giving R&D tax credits out.
The HMRC are always in the news cracking down on tax evasion. It is nice to know that they give some cash back to SME’s every now and again. If you want to know more about this then drop us a line.
Think new products, changes to products, changes to raw materials, products that never made it to market and you have the idea.
R&D Tax Credits: Processes
It isn’t just the things you make that can change over time. We are always looking at the margin. Changing the way we do things can save money, make processes smoother and reduce downtime. All of this takes effort and cash.
Again, this is where R&D tax credits can soften the blow of the money you have spent. The processes any manufacturing business carries out are the lifeblood of what they do. If you have changed the way you do things, then we need to talk.
Think embedding new equipment, changing the order you do things in or adding a new process and you have the idea.
R&D Tax Credits: Computing
As the world seems to be doing everything digitally nowadays, you will have found that your manufacturing business is the same. We all rely on tech in the here and now that didn’t exist a few short years ago. And things are set to change again in the future.
If you have added any tech solutions to your manufacturing business over the last few years, then these are also most likely eligible for R&D tax claims. People tend to think that software, for example, isn’t eligible for an R&D tax claim. This isn’t the case at all. What the tax man is looking for is how you implement your computing solutions. That is where the uncertainty is – that is where the R&D tax claim lies.
Think new software, automation or adapting technology solutions and you have the idea.
Some businesses can’t see the R&D tax claim that is sat right in front of them. That’s because they haven’t been trained. If you are unsure then first apply the three areas above (product, process and computing, if you’ve already forgotten.) If it still doesn’t make sense, then get in touch and we’ll help.