R&D Tax Relief for the Manufacturing Industry
The principle of lean manufacturing is to eliminate actions from the manufacturing process which have no value to process. Companies are investing time and money into streamlining such processes, using innovation and creativity to become as efficient as possible. Projects involving this type of work should consider the benefits of the Research and Development Tax Credit scheme and how it could give their business a financial boost.
Taking Advantage of R&D Tax Relief for Your Manufacturing Business
In an industry that strives on innovation, manufacturing businesses are benefitting from the Government’s R&D tax relief scheme. Since its introduction in 2000, £billions have been claimed in R&D tax credits, either through a reduction in Corporation Tax or a cash sum (if non-profitable). The scheme rewards businesses investing towards advancements in Science and Technology, making the UK more globally competitive. For companies investing in lean manufacturing,the scheme provides several benefits. Apart from the obvious financial incentives, the R&D activities can help them to become more competitive, raise industry standards, become leaders in their field, enhance efficiency, lower costs, meet changing customer expectations and explore innovative ideas.
What Activities Qualify for R&D Tax Credits?
Activities involved in designing and developing a new or improved product, service, device, material or process can qualify for relief. There must also be an element of uncertainty in the projects outcome during the design and development phase. Examples of qualifying lean manufacturing activities include:
- Improving the efficiency of an operational process
- Creating software which automates a process
- Enhancing the quality or reliability of a product
- Creating unique processes for combining new materials
- Streamlining a manufacturing process to make it more cost-effective
- Customising technology to enhance current product functions
- Developing test prototypes or virtual platforms to reduce failed projects
- Collating scientific research to meet high industry standards
- Ongoing analysis of the accuracy of project developments
It doesn’t matter if the project was successful or not as the scheme aims to reward companies for the investment made into researching advancements as well as developing them, meaning the intention to innovate outweighs the result.
Which of My Manufacturing Expenses Qualify?
Through the SME scheme, companies can claim back up to 33.5% of eligible expenses. R&D tax credit qualified expenses include staff wages for involvement in the project, materials, external worker costs and software. Capital expenditure is a complex area which often isn’t eligible for R&D tax relief. However, if you think there’s capital expenditure which should be included in your claim, R&D tax specialists will be able to advise. The research and development tax credit scheme requires claims to made within two years of the company’s year end of the project, so don’t delay your application.
Getting Support with Tax Incentives for Manufacturing
It’s been reported that about 90% of eligible companies are not claiming the R&D tax relief they’re owed. R&D Tax Solutions aims to reduce this figure by helping manufacturing companies to claim R&D tax credits for any qualifying activities. We’re a Manchester based tax consultancy focusing on R&D tax, meaning you’ll get specialist support to make a successful claim.
To find out more, just visit our R&D Tax FAQ page and get in touch with our experts by calling 0161 298 1010 or emailing office@rndtax.co.uk.