Manufacturing R&D Tax Credits, Ways to Improve your Profit Margins
anufacturing R&D Tax Credits have been the highlight in a number of recent discussions. The possibility to significantly boost profit margins seems attractive to many business owners.
Is your Manufacturing Business able to Claim for R&D Tax Credits?
We often investigate the use of manufacturing R&D tax credits. From this investigation it becomes apparent that many companies fail to claim R&D relief for activities, usually because they are considered routine by the business rather than innovative. Examples of qualifying of activities often include:
- Development of processing and handling techniques.
- The design, testing and trialling of prototypes and demonstration plant.
- Scaling up of production processes. Often lab based systems do not scale up to operational capacity without further technical achievements being obtained.
- Adaption to include new or alternative materials. This may be driven by legislation, environmental aims or operational efficiency.
- Integration of new technology with old systems.
HMRC and Claiming for R&D Tax Relief
Complexity of the legislation makes it often difficult to compile the lengthy details required by the Revenue and Customs for an application to be successful. Further complexity comes as manufacturing often covers a wide area of business activities. We found that common themes of innovation exist across all sub sectors:
- Food, beverage and tobacco products
- Textiles and textile products
- Wood and wood products
- Pulp, paper and paper products
- Publishing and printing
- Petroleum products and nuclear fuel
- Chemicals, chemical products and man-made fibres
- Rubber and plastic products
- Other non-metallic mineral products
- Basic metals and fabricated metal products
- Other machinery and equipment
- Electrical and optical equipment
- Transport equipment
Don’t Miss Out on R&D Tax Credits
Government figures show the number of companies claiming manufacturing R&D tax credits is increasing. However, most manufacturers still miss to claim for rather obvious eligible activities.
There are c22,000 registered manufacturing companies on companies house. Based on HMRC’s published figures only 9 out of 10 companies claimed relief during the last year. Government statistics identified manufacturing as the third largest sector in the UK economy. This sector alone generated £140bn, representing just over 11% of the UK economy.
Find Out More About R&D Tax Credits for the Manufacturing Industry
Given the evolving nature of this industry we strongly believe a significant number of qualifying companies are not fully utilising manufacturing R&D tax credits and the associated tax relief. We recommend you to contact us and discuss your manufacturing activities with one of our consultants. We guarantee you will be amazed of how many activities can qualify for manufacturing R&D tax credits. Contact R&D Tax Solutions today for help with your claim.