UK engineering has a rich heritage. In a post-pandemic world and the ink on the Brexit deal finally dry, the government is pushing hard for that to continue. One of the government’s incentives for engineers to keep contributing to the UK economy and the world around us is the research and development (R&D) tax credits scheme.
Yet, too many are drastically underclaiming the R&D tax credits available to them — or aren’t even claiming at all, with the main reasons being:
- scepticism in the scheme; many businesses believe that what they do is merely day to day operations
- fear that the claiming process will be too complex
- the assumption that because someone else designed the product, they can’t claim
HMRC’s interpretation of R&D is broad, meaning many roles in an engineering business count as R&D, even if, by the industry’s standards, they don’t necessarily feel like R&D. In other words: any development where the result has made the product or process bigger, better, stronger or faster is likely to qualify as R&D.
Almost any type of engineering firms could be eligible to claim R&D tax credits. Getting your head around the tax laws can be exhausting, and the claim process can be complicated. That’s why to have the best chance of a successful claim you need a specialist on your side.
Engineering projects that may qualify for R&D tax relief include:
- Innovative product development using computer aided design tools
- Development of second generation or improved products
- Prototyping and three-dimensional solid modelling
- Development of computer models
- Integrating new materials to improve product performance
- Designing, constructing, and testing product prototypes
- Increasing ease of operation or suitability of products
- Integrating the latest technical advancement into a larger processing plant
- Adapting materials to enable equipment to be used in unique and challenging environments
Key questions on R&D tax relief answered
What activities can be included in a R&D project?
- Defining technical objectives
- Identifying uncertainties
- Feasibility studies, reviewing new and competing technologies
- Analysing, designing and developing the technology
- Producing technical specification or other documents to explain and support the R&D project and advancement
- Testing the product, process, service or software
- Planning and managing projects
- Administration, finance and personnel services specifically required to support R&D activities
- Training to support R&D
What expenditure can be claimed for in a R&D project?
- Staff Costs – Employee costs (salary, national insurance and employer pension) are apportioned for their time spent on the R&D project plus any reimbursed associated business expenses
- Software – Purchased for R&D purposes and costs apportioned for any subsequent use
- Subcontracted R&D – You can claim 65% of what you paid your R&D subcontractor
- Utilities & Consumables – Water, fuel, power and material used in the project
- Prototypes – Produced for R&D purposes
About Easy R&D’s R&D tax credit claim process
Claiming R&D tax relief is a niche.
Here at Easy R&D, we’ll probe your company’s activities to reveal the true extent of your company’s R&D.
Averaging £54,000 per claim, we’re a business built around expert tax professionals, skilled technical report writers, and flawless processes to ensure your R&D claims are successful — with maximum return. You could even reduce your corporation tax bill to zero.
HMRC’s criteria for claiming is purposefully broad, so what qualifies may surprise you.
Interested in claiming R&D tax credits?