Could your business benefit from R&D tax credits?

Dec 20, 2022

Manufacturing firms may be missing a trick when it comes to R&D. Get this right,
and it could make a big difference to your bottom line


Manufacturing firms are coming under pressure from all sides just now: with the
rising cost of raw materials, margins are being squeezed. Finance is more expensive
and harder to come by, and the final buyer may be struggling to finance their order.
In this environment, manufacturing firms need all the help they can get. R&D tax
credits could be part of the answer.


An R&D tax credit is a cash payment from the government to encourage businesses
to undertake research and development (R&D). There are two types of credit: small
and medium sized enterprises (SME) R&D Tax Relief and Research and Development
Expenditure Credit (RDEC).


The credit is worth getting: for example, a qualifying SME (criteria includes having
fewer than 500 employees and a maximum turnover) can claim up to 33p for every
£1 spent on R&D.


What qualifies as R&D?
The one thing that holds back businesses of all kinds from claiming the R&D tax
credit is that they don’t realise they qualify for it. HMRC statistics show that the
uptake of tax credits is uneven across UK industries, and there is clear potential for
you to help your clients in the manufacturing industry to take advantage of the
scheme.


Before asking whether you should be doing something different to qualify as R&D
activity, there are a number of activities that manufacturing firms may already be
undertaking that could see them reach the criteria, such as:
● Development or adaption of tools and materials to improve efficiency
● Adapting manufacturing techniques to suit certain environmental or land
conditions
● Identification of technological improvements to the manufacturing products
and software used (can include developing, testing and implementing
systems that are technically difficult)
● Research and design
● Development of environmentally friendly methods or sustainable technology
● Development of sophisticated systems to meet health and safety systems
● Using materials in a new way
● Development of unique products
● A new system for superior energy efficiency


With manufacturing regulations frequently changing, there are clear opportunities
for R&D to be undertaken by manufacturing firms.


Accessing funds quickly

You need the money and you have identified the opportunity to claim R&D tax
credits. But the wheels of the tax system can move slowly–what if the need for
funding is urgent?


There are lenders willing to advance a percentage of the value of the R&D tax
credits, giving you access to funds in as little as a week of your first conversation
with the lender.


The Chamber Finance Finder can connect you quickly with a lender who will be able
to help you find a solution for you here

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