What type of engineering and manufacturing projects qualify for R&D Tax Credit claim?
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R&D Tax Credits are incentives for innovative businesses in the UK and according to HMRC any business trying to investing in research and technology may claim for R&D Tax Credits. These are a valuable source of funding that can benefit you in many ways, they will regulate cash flow and you can also invest these credits. It allows eligible companies to claim up to 33% of qualifying R&D expenditure. R&D Tax Relief is also a research and development incentive that reduces your company’s tax bills.
Manufacturing is a vital innovative sector and it is making advancements in the manufacturing process and products to meet increasing market demands. Many manufacturing and engineering projects fulfill prerequisites of R&D claim for R&D tax credits or R&D tax relief unknowingly. This blog will discuss eligible manufacturing and engineering projects and activities for an R&D claim.
What Type of Manufacturing & Engineering Projects Qualify for R&D Tax Credits Claim?
If you are a manufacturing or engineering firm then there is the possibility that you are working on several qualifying projects and you can claim against the qualifying expenditure of such projects.
Following are the examples of manufacturing and engineering projects which might qualify for the R&D Tax Credits Claim:
- Improving already developed product
- Innovating product development with computer-aided tools
- Creating manufacturing equipment
- Development of computer models
- Tooling and equipment fixture design
- Scaling up of manufacturing processes
- Integration of new technology in any system
- New software development
- Developing cost-effective operational processes
- Designing, constructing, and testing product prototypes
- Streamlining manufacturing processes via automation
Or the projects which aim to:
- Identify uncertainties
- Review technologies
- Produce technical specifications
- Plan & manage project
- Test the product or process
What is the Qualifying Expenditure for Manufacturing & Engineering Projects?
Qualifying expenditure means the cost against which you can claim R&D Tax Credits. You can claim R&D Tax Relief on costs that have been expensed through the profit and loss account and in some situations capitalised expenditure can also be considered as qualifying expenditure.
Qualifying expenditure includes:
• Staff Costs
Salaries, national insurance, and pensions of employees directly involved in R&D projects including any reimbursed associated costs
• Software Costs
Cost of software and their license bought for R&D projects.
• Subcontracted R&D Expenditure
You can reclaim up to 65% of subcontracted costs for an R&D project.
• Prototypes:
You can reclaim the costs of the prototype produced for R&D purposes.
• Utilities & Consumable:
Water, fuel, material, and power used in R&D projects.
How a Staff can significantly impact a claim for manufacturing and engineering projects?
R&D teams can’t help your business to stabilize without powerful team management and support. It would be an anomaly for any R&D team to work independently because practically, it’s not attainable to any extent. There are many team members which contribute to make the R&D project successful and help other businesses to achieve their goals.
The R&D project has several team members but the most eminent members include the manager, lead developer, engineer, quality control, and many other non-technical staff members under the management and accounting wing of the company.
It has now become integral for any business to have R&D claims to leverage their loss and establish their economic status competing with other peers. But, if you need assistance while selecting the option to go for the R&D claims or just want a sincere idea about your business, you can talk to our R&D tax credits specialists. Furthermore, our team of R&D tax credits specialists will also assess whether your business is eligible for the R&D claims or not and help you decide accordingly after taking the R&D tax credit expert’s advice.
The discussion about the R&D claims clarifies your eligibility, justifies your business need, and keeps everything in the account. R&D claims help you achieve your future business goals. This will not only explain the costs involved and other necessary conditions but saves you from a lot of tax-related confusion and clear up your queries.
Whenever you’re planning to claim for R&D tax credits, it is crucial to visit an R&D tax credits specialist and find out what your business needs are and what suits your model to get a smooth claiming process without worrying about anything.
Feel free to contact our competent and experienced R&D tax credits specialists at any time for getting fully maximised R&D Tax Credits or R&D Tax Relief.