R&D For Different Business Sectors

Research and development (R&D) tax credits through HMRC’s Research and Development Tax Scheme are a valuable incentive to reward UK businesses for investing in innovation, and a powerful source of funding for firms looking to grow and develop new products, services, procedures and internal systems.

Due to time constraints, lack of awareness and doubts around eligibility, there are thousands of companies not currently taking part in the scheme. Some common industries that could be missing out on claiming for R&D include but are not limited to manufacturing and engineering, IT, haulage, fleet management, construction and education.

Many believe that to qualify for R&D tax relief a business must employ people in lab coats or be undertaking scientific research, but any type of research and development could qualify.

What is R&D?

Research and development (R&D) tax credits are a valuable government incentive that rewards UK businesses for investing in innovation. It is a powerful source of funding for businesses looking to grow and develop new products, services, procedures, and internal systems.

There is a misconception that to qualify for R&D tax relief then a business must employ people in lab coats and be undertaking scientific research, but that is not the case. Any type of research and development could qualify.

Here are some examples of R&D eligibility within various sectors:

Manufacturing and Engineering

• Optimising a product’s assembly line by adopting / developing new technology.
• Developing new innovative quality assurance equipment.
• Creating a unique assembly line process.
• Developing efficient tooling equipment.
• Developing bespoke equipment or adapting equipment in a manner that promotes sustainability and/or efficiency.
• Integrating bespoke software into machinery in efforts to guarantee operations efficiency/ enhance productivity.

Haulage and IT

• The engineering of unique scripts to aid in data automation and data migration from legacy systems to a superior/new system.
• The design and subsequent engineering of a unique platform capable of streamlining global processes.
• The continuous testing, trialling and modifications of systems architecture in efforts to achieve superior functional capability within the overall deliverable.
• The engineering of machine-based intelligence to aid in resolving invoicing inefficiencies, accurate data segmentation and interdepartmental report generation.
• The integration of global internal systems into the customs database to ensure all departments adopted a proactive stance to the import/export changes presented by Brexit.

Fleet Management

“We’ve had great success within fleet management,” begins Mark Joyner, Managing Director at RDS. “This type of company tends to have a constantly evolving inventory and each company is slightly different to the next so, there’s not a one-size fits all IT solution that will work for every business.

“Because of these complexities and the need to track and cross reference a large number of vehicles and customers across multiple locations, we often find companies working in this space will invest in bespoke IT systems. The research and development related to this then makes them eligible for tax credits but that’s not widely known.”

Construction

• Using materials in a new way to achieve greater efficiency or functionality.
• Development of unique products to deliver state-of-the-art facilities.
• Modifying an existing technique (methodology) for a unique application.
• Developing an innovative modular construction method.
• A new system for superior energy efficiency.

Education

• A custom innovative learning management system.
• A technical unique student communications portal.
• Developing innovative educational games and toys (through technological/ scientific integration).
• An advanced class timetable management software.
• Building technically advanced online courses and libraries.

Any UK limited business can claim. There are no restrictions on the type or size of business, although there are different types of R&D scheme depending on whether you fit HMRC’s guide as being an SME or large company.

The project must relate to your company’s trade and there is no rule that says you need to have a finished product or service, the research/development phase is enough for you to qualify.