Engineering Innovation: An Intro to R&D Tax Relief in Manufacturing
4 Minute Read
Research and development (otherwise known as R&D) is the beating heart of innovation in business. Whether it’s carried out to create new, smart and savvy processes or used to get the job done more quickly without compromising on quality, the overall goal remains the same: to help businesses succeed.
This sounds brilliant, we hear you say – so why isn’t everybody doing it? Well, the chances are that, at least on some level, they are. But the time and costs that come with R&D in the manufacturing industry are enough to make you wince. Fortunately, for companies looking to assert themselves as leaders in their field, R&D tax credits are available to help them earn innovator status.
With the help of R&D tax relief, manufacturers can speed up processes with new machinery and develop swanky new computer systems that improve the overall running of the business, all in the name of innovation.
Unfortunately, not enough businesses are claiming their credits. In fact, according to the latest report published by HMRC, the North East recorded among the fewest R&D tax applications in 2017-2018 compared to other regions in England.
To help you discover the benefits of claiming R&D tax credits for your manufacturing or engineering business – as well as the types of projects that generally qualify – we’ve put together a short guide to help you get started.
Advance your product development
Arguably the most obvious way to innovate in your manufacturing business is through product development. But this can often be the most expensive and time-consuming method of R&D in your company.
Luckily, there are a number of different product development projects that get the green light from the government as being R&D tax-friendly – meaning you finally have an excuse to get creative without worrying about costs!
For example, this could involve testing product prototypes, enhancing second-generation products or perhaps trying out new materials to improve product performance – and all without racking up significant costs for your business.
Improve your day-to-day processes
Without processes in place, you probably wouldn’t have the ability to manufacture products. So, what better way to ensure the efficiency of your company than working on developing new processes that speed up workflow without damaging product quality?
To do this properly, thorough research is required (something that, quite often, we don’t have a lot of time for). By claiming tax relief on the hours your staff have spent researching and developing new processes, you can rest assured you’re helping to streamline long-term processes without hampering your finances.
This sort of activity could include: creating processes that meet new regulations and requirements, implementing cost-effective operational processes and developing alternative processes in case of last-minute problems.
Consider enhancing your computing
In this increasingly digital age, computing and technology have become the Romeo to our manufacturing Juliet. Whether you’re using them to create 3D product modelling or develop numerical control programmes, R&D through computing is a highly effective way to innovate within your manufacturing company.
By developing computer models and building on existing technology, you can catapult your business to the forefront of your industry through eligible R&D tax allowances.
Whether you know it or not, your manufacturing business is innovative – from tackling the small day-to-day problems when they arise to developing new processes that transform your products and business model.
The latest statistics show that 25% of R&D tax claims come from the manufacturing industry, yet so many manufacturers are still missing out. To find out whether your organisation or project is eligible for tax credits, get in touch with Lumo today and we’ll let you know if you have a claim.