R&D in Manufacturing
The British government supported UK manufacturing businesses with almost £7.4bn of R&D tax relief funding in 2020 alone.
The Cost Of R&D
According to the latest figures, the UK spent a total of £7.4bn on R&D projects in 2020, with 22% of this coming directly from the manufacturing sector.
The final R&D bottom line cost is ultimately made up of a myriad of smaller parts, including:
Defining technical objectives
Feasibility studies
Reviewing competing technologies
Analysis, design and development
Producing technical specifications
Product testing
Project planning & management
HMRC R&D Tax Credits
More than 20% of the 85,900 R&D Tax relief claims from 2020 came from the manufacturing industry averaging at £90,000 for SMEs. However, there are still thousands of businesses that have missed out on these incentives because they simply didn't realise they were eligible.
So for those in the manufacturing industry, this brings us to the big question.
What Qualifies As Research & Development In Manufacturing?
According to government guidelines, projects that count as R&D must show that they:
Have looked for an advance in science & technology
Had to overcome uncertainty
Attempted to overcome this uncertainty
Couldn't be easily worked out by a professional in the field
The issue for most manufacturing businesses is that these definitions can be subject to interpretation so it's a little easier to show some of the more common projects which are considered R&D manufacturing.
Products
Product development using computer-aided design tools
Development of second-generation or improved products
Prototyping and three-dimensional solid modelling
Integration of new materials to improve product performance
Testing product prototypes
Increase ease of operation or suitability of manufactured products
Processes
Designing and developing cost-effective and innovative operational processes
Integrating new materials to improve manufacturing processes
Designing and evaluating process alternatives
Developing processes that would meet increasing regulatory requirements
Streamlining manufacturing processes through automation
Computing
Developing unique computer numerical control programmes
Designing innovative logic controllers
Development of computer models
Virtual, 3D and mixed reality modelling
There's a common misconception that R&D is almost exclusively reserved for those in lab coats or the software industry, but the reality couldn't be further from the truth. The manufacturing industry makes a significant contribution to the UK's technological growth and the rewards are there to be claimed simply by engaging in the government's R&D manufacturing tax credits scheme.
With almost 10,000 UK manufacturers claiming R&D manufacturing tax relief and with the government continuing to rally around the industry, it's a great time to find out if you're undertaking activities that are eligible for a successful claim.
To learn more about making an R&D claim, please contact us.