Manufacturing and engineering businesses face a series of challenges each and every day to boost their business. It can be a competitive industry with rivalry from China and India as well as the rest of the world. In terms of manufacturing, if China sneezes, we definitely run the risk of catching a cold. But on the other side of the same coin, if China is doing well, it can have a detrimental effect on the competitiveness of the UK manufacturing industry. Whichever way you look at it, there are some pretty stern challenges at all times.
One of the ways that the UK manufacturing industry can compete is on innovation. In China, copying the innovative designs and ideas from the rest of the world is a commonplace practice. In the UK in particular, we are proud to say that we can come up with innovative solutions to problems and use the technical expertise here to produce goods that change the way people live.
Coming up with new ideas
The UK is a hotbed of innovation, with several hubs such as London and Glasgow leading the way in many different industries. The talent coming out of UK universities coupled with a strong culture of coming up with new ideas is the perfect combination for innovation. The largest manufacturers in the UK have massive research and development teams geared up to finding the newest solution in materials, packaging, processes and products.
But even SME’s have a research and development element to what they do, but don’t often realise it. In terms of the way the UK government categorise research and development, there are several things that will happen regularly in an SME that would be classed as R&D, such as –
- Developing a new product to go to market
- Making changes to an existing product to meet changing regulation
- Improving the process to make it more efficient
- Developing new software to aid the manufacturing process
And these are just some of the examples. But the question is
“Why is it important what the UK government classes as research and development?”
What does this mean to my business?
The government does many things that may or may not affect the small business owner. Some changes in taxation or legislation can be felt immediately. Others take some time to get through. Others still pass under the radar. Unfortunately, R&D is one of those that pass under the radar for many small businesses and their owners. HMRC can be stale and boring. This is one piece of information that it can be paid to be bored by!
R&D tax credits are a government incentive that help the small business by putting cash back into their coffers. That’s right – this is something where the tax man actually gives money back to the small business. Who would have thought that was possible?
The areas of business improvement outlined above as well as many others can be included as part of a qualifying claim and this can be worth tens of thousands of pounds to a company. Don’t miss out on these tax credits as they can even be backdated for the last 2 tax years as well as the current one. This means that the first claim is often a large one that can set your business with the cash to –
- Pay off a loan
- Invest in their team
- Take out of the business in a tax efficient way
- Put back into more research and development
And you can submit a claim yourself via the HMRC. But it can really pay to use an expert for an R&D tax claim for your manufacturing business.
Lumo – R&D tax experts
Lumo have established themselves as one of the leading R&D tax companies in the UK having helped hundreds of SME’s get their hands on millions of pounds worth of R&D tax credits for manufacturing businesses. And you can tap into this expertise too. Lumo are there to help companies with their R&D tax claims. One of the main problems with a claim is that they take time out of the normal working week to put together. You need to marry the financial information relating to an R&D project with an explanation to the HMRC of what actually happened. And then you need to back this up if there are any questions.
Take all of this strain out of an R&D tax claim by getting Lumo to gather all of this information and present it in a way that makes sense to the tax man. The money can be back in your business in as little as 4 to 6 weeks – how’s that for efficient?