Who can claim manufacturing R&D Tax Credits?
R&D TAX CREDITS EXPLAINED To encourage research and development in the manufacturing industry, the government introduced R&D Tax Credits in 2000.
REDUCE YOUR HMRC LIABILITY
The Small to Medium-Sized Enterprise (SME) and Research and Development Expenditure Credit (RDEC) schemes reward R&D activity by providing Corporation Tax relief or cash credits. The schemes ensure SMEs and large businesses alike can claim manufacturing R&D Tax Credits, encompassing profitable and lossmaking companies.
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A government incentive dedicated to advancing the manufacturing industry
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Launched in 2000 for SMEs and in 2002 for larger companies
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Rewards innovation, risk taking, and research and development
Almost 90,000 R&D Tax Credit claims were made by UK companies in the 2021 tax year, an increase of 7% from the previous year
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Backdate claims by up to two financial years
Collectively, UK companies claimed £6.6bn in tax relief over 12 months
WHAT COSTS CAN YOU CLAIM FOR?
Successful claims are paid either as relief against Corporation Tax, or as cash credit Claims can be backdated by two years R&D Tax Credit calculations consider the overhead costs associated with expenditure during research and development projects as the government aims to reward manufacturing innovation. In most circumstances, SMEs can benefit from R&D tax relief by claiming payable tax credits in cash from HMRC.
OVERCOMING TECHNICAL CHALLENGES
STREAMLINING BUSINESS PROCESSES
DEVELOPING BESPOKE SOFTWARE
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Staff wages and other related costs
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Payments made to subcontractors and external workers
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Consumed material costs
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Software licensing costs
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Payments to clinical volunteers
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Lighting, heating and power costs
CREATING AND TESTING PROTOTYPES
TRIALLING NEW OR SUBSTITUTING MATERIALS
TRIAL AND ERROR
WHO IS ELIGIBLE? •
UK limited companies actively trading
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Companies of all sizes
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Profitable and loss-making businesses
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Eligible R&D spend within the qualifying period
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All companies undertaking research and development in the manufacturing
HAVE A QUESTION? SPEAK TO AN R&D TAX CREDITS EXPERTS TODAY! 01332 409 714
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HOW DOES THE R&D TAX CREDITS SCHEME WORK? Introduced by the UK government in 2000, R&D tax credits are a form of tax relief for research and development work undertaken by a business, providing you with a tax reduction or a lump sum payment. Delivered by HMRC, R&D Tax Credits are an incentive introduced to encourage investment in research and development projects from manufacturing companies. Tax Credits allow a company to reduce its tax bill or claim cash credits as a proportion of its R&D expenditure over the qualifying period. You can make a claim each year. As well as the latest financial year, you can also claim retrospectively for the previous two years. For example, if the end date of your accounting period each year is March 31, you would need to submit your R&D tax credit claim for the accounting period April 1 2021 to March 31 2022 before midnight on March 31 2024. Separate schemes exist for SMEs and larger companies with different rates of relief. Profit-making SMEs can expect to receive up to 21.5% of their qualifying R&D expenditure as a tax credit, with the equivalent figure being 15% for large companies under the RDEC scheme.
WHICH R&D ACTIVITIES QUALIFY? R&D encompasses activities undertaken by companies attempting to solve a problem and looking to overcome technological difficulties by creating new products and services or improving existing ones. To qualify for R&D tax relief, the process does not need to be successful.
Examples of eligible R&D activities in the manufacturing sector are: •
Creating or developing new products or processes
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Adapting to changes in legislation or industry requirements, including energy efficiency and reducing carbon emissions
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Developing a new and innovative approach to manufacturing, engineering and foundries systems
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Creating bespoke solutions
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Manufacturing prototypes, pilot runs and testing
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Developing or creating new composite materials
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Trialling and developing systems to potentially improve performance, cost efficiency or methodology
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WHAT DOES THE FUTURE HOLD? The Treasury plans to simplify R&D Tax Credits while ensuring manufacturing companies that invest heavily continue to be incentivised. The government remains committed to supporting R&D-intensive SMEs, with tax relief providing essential support. As such, the government has outlined its intent to increase public funding of research and development, targeting UK investment in R&D of 2.4% of UK GDP by 2027.
IN SUMMARY... The good news is that the government has demonstrated a commitment to helping companies that undertake R&D work, having increased the rates of tax relief in recent years. This support can potentially transform a business by enhancing productivity, stimulating innovation and having a positive holistic impact. However, HMRC requires every claim to be submitted in line with its strictly defined procedure. For example, HMRC must be pre-notified of an intended claim. This is why having an expert like randd on your side is vital, ensuring all the necessary boxes are ticked. We can work alongside you to identify genuine qualifying expenditure which is often overlooked by self-claimants or accountants, and to fully maximise your claim.
RANDD’S MOST ACTIVE SECTORS MANUFACTURING
CONSTRUCTION
SOFTWARE & I.T.
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CLAIMS SUBMITTED
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CLAIMS SUBMITTED
£51.6K
AVERAGE CLAIMED
£41.8K
AVERAGE CLAIMED
£45.5K
£19.62M
£5.93M
£9.19M
TOTAL CLAIMED
TOTAL CLAIMED
AVERAGE CLAIMED
TOTAL CLAIMED
ABOUT RANDD Since randd was founded in 2008, we have helped thousands of UK businesses successfully claim back millions of pounds using the R&D Tax Credits initiative via our simplified and efficient claims process. Our record speaks for itself and we maintain unrivalled success rates with an average claim value of £50,000. From our headquarters in Derby and over 20 UK offices, our team of Chartered Accountants and technical experts have successfully submitted around 4,500 claims for our clients and secured more than £200m on their behalf. Whether it is a client’s first claim or they have benefitted from R&D Tax Credits in the past, we take the time to understand their company. Our strong relationship with HMRC allows us to deal with each claim entirely on our client’s behalf while optimising claim value.
20+ UK offices
4,450+ Claims submitted (and counting)
£219m+
Claimed back for our clients
£50,000 Average claim amount
CLIENT STORIES With our unique six-step process that is tailored specifically to each client, our team of Tax Credit specialists have been able to compile an impressive collection of success stories in the manufacturing industry. We work tirelessly to make sure every claim is refined to guarantee results, and that level of care and commitment can be seen across the following selection of case studies. Our team boast the ideal combination of skill, experience and industry knowledge to help secure the highest possible payout from HMRC. Every client has a unique story to tell. The businesses showcased across the following pages regularly conduct research and development activities that qualify under the R&D Tax Credits scheme, and each company is unique in its innovation process.
We have helped a broad range of companies in the manufacturing industry and you could be next. Contact us today!
01332 409 714
info@randduk.com
SECTOR – MANUFACTURING AND TEXTILES CLAIM VALUE - £274,000 A Carlisle-based tweed weaver has claimed £274,000 in R&D Tax Credits over six years, with the latest addition of £66,000 secured for advancements in its manufacturing process. This well-established company designs and manufactures fabrics for the women’s fashion industry. The business trials a combination of multiple yarns with hugely differing characteristics, demonstrating innovation of the highest order.
£274,000 CLAIMED IN R&D RELIEF OVER SIX YEARS
An experienced workforce with a unique skill set undertakes trial and error and problem-solving activities to reduce costs, enhance quality and improve sustainability. Previously secured R&D Tax Credits have enabled the company to evolve and invest in modern equipment, allowing the business to maintain its position as a market leader in manufacturing fabrics.
SECTOR – MANUFACTURING AND RETAIL CLAIM VALUE - £320,000 By working with randd, this group of companies specialising in the retail manufacturing industry secured £320,000 in R&D Tax Credits. The group designs, manufactures and installs bespoke display products for the point-of-sale (POS) industry, serving an array of prestigious clients in large outlets, leading supermarkets and beauty retailers.
£320,000 IN TAX RELIEF AWARDED
With decades of experience in the POS industry, the group has refined its skills and now delivers the highest standard of service possible, providing clients with a complete solution from initial concept and design to final installation. The business has conducted R&D to develop its physical prototypes which determine the subsequent manufacturing process, accounting for intuitive strategies whereby processes continue to evolve.
SECTOR – MANUFACTURING AND CONSTRUCTION CLAIM VALUE - £500,000 A Nottingham-based fabrication specialist claimed over £500,000 in R&D Tax Credits, yielding £261,000 during its first two years working with randd.
£261,000 IN TAX The company manufactures steelwork infrastructures, supporting a multitude of projects that lead to the installation of roads, railways RELIEF AWARDED IN and nuclear sites. The business is a market leader in the design, THE FIRST 2 YEARS manufacture and installation of bridges and gantries, such as the awardwinning Cathedral Green Swing Bridge in Derby. Research and development activities have facilitated the development of complex elements, such as curved footbridges with composite materials. As such, R&D Tax Credits have ensured the company can improve its design and build process while employing local professionals.
SECTOR – MANUFACTURING AND ENGINEERING CLAIM VALUE - £427,000 With randd’s assistance, this Chesterfield-based engineering company has claimed £427,000 in R&D Tax Credits, with its most recent claim awarding £106,000. The company manufactures specialist, bespoke fabrications for complete turnkey solutions while overseeing the design and commissioning of its products. The business’s fully equipped workshop and new manufacturing unit enable the company to undertake research and development activities to fulfil its client’s requirements.
£427,000 IN TAX RELIEF AWARDED
Serving as a trusted partner to key organisations, the company has developed a proactive strategy consisting of technical advice, feasibility studies and early-stage support. Subsequently, clients’ needs are realised in a cost-effective, achievable and practical manner.
CLIENT TESTIMONIALS “randd were very professional when an issue was first raised by HMRC, making sure that we understood the appeals process and the R&D Tax Credit requirements, while also making sure that they understood our technical aspects and innovation in each part of the application. From this, they submitted a full appeal which was successful and I would be happy to recommend them in the future.”
“Most businesses have an element of research and development in them. Speak to randd — they will tell you whether or not you have got a claim and look after it for you. They established our story from the very beginning and have helped to develop that story.”
“R&D Tax Credits have enabled Croft Engineering to sustainably achieve our growth plans. I would highly recommend randd to anybody — they made this process extremely simple.”
“At first we thought that we would not qualify, but after a conversation with randd, we quickly realised that most of our daily activities were qualifying expenditure. I would suggest to anybody that may have an R&D claim to get in touch with randd.”
“R&D Tax Credits have enabled Bespoke Motorsport Radiators to purchase the machinery needed to facilitate all of our R&D work. Without randd, this would not have happened and we would not be in the position we are in today as the UK’s leader of the motorsport cooling industry.”
We have helped a broad range of companies in the manufacturing industry and you could be next.
Contact us today! today!
Suite 1 and 3, 1st Floor South Cardinal Square Nottingham Road Derby DE1 3QT
01332 409 714 info@rannduk.com www.rannduk.com