The fashion industry is perhaps one that wouldn’t immediately spring to mind when it comes to being eligible for Research and Development (R&D) Tax relief – but it can!
Same as all industries, R&D tax relief will be available for companies seeking to improve the industry in some way, aiming to make scientific or technological breakthroughs.
This can manifest itself in design analysis, material development, and even wearable technology.
Instances in which companies can claim R&D relief in the Fashion industry
The materials that we wear day-to-day would have at some point been a part of a research and development programme.
Take a waterproof jacket for example. This would have had to be researched and developed with a particular goal in mind.
But innovation comes at a cost. R&D tax relief allows fashion companies to mitigate the financial burden of their projects. Some of the eligible activities in the fashion industry include:
- Creation of sustainable materials
- Smart and wearable technologies/materials
- Cutting-edge advanced manufacturing methods
Is my Fashion Company eligible for R&D Tax relief?
There are often misconceptions when it comes to what qualifies for R&D relief in the fashion industry.
One misconception is that R&D is exclusively for high-tech companies. This isn’t true, as R&D can also encompass companies that seek to enhance traditional materials or develop new technologies.
Another is that results must be immediate. The R&D process can be time-consuming, and this is reflected as there are schemes to support longer-term projects.
R&D also doesn’t have to just be about product innovation either. HMRC clearly states that R&D relief will cover software, technologies and products.
The benefit of R&D Tax relief for fashion companies
There is increasing pressure on fashion brands to design products that challenge competitors, which can be difficult given that there is always demand for something new in fashion.
The scheme provides an opportunity to alleviate any financial barriers that may be in front of fashion companies, particularly those that are on the smaller side.
Whether you are a fashion company that is already doing activities that you may believe are eligible for R&D relief, or you are looking to start up a project and you are concerned about funding, it is best to contact a specialist who will be able to explore options with you.
Our advisors specialise in R&D advise to brands, so get in touch if you need guidance.