Contents
The manufacturing sector is often subject to high demands for processes to be faster, more efficient, more cost-effective and environmentally sustainable.
It can be challenging for manufacturing businesses to manage these often conflicting requirements, but failure to do so can cause friction with clients and potential issues with changing legislation.
There is a need for the manufacturing sector to boldly innovate and businesses hoping to spearhead these improvements will benefit from the effective use of R&D tax relief claims.
What challenges does the manufacturing sector face?
In order to keep pace with the demands of a high-pressure world, the manufacturing sector has needed to develop and adopt new technologies with increasing frequency.
Many of the processes that underpin manufacturing work were developed and refined at a time when environmental consciousness was less prevalent.
This means that there may be scope for developing advances capable of either reducing the environmental impact of the process itself or being better equipped to handle sustainable materials.
All of this innovation needs to be done with a focus on keeping the eventual cost to clients and customers low.
Capitalism dictates that the cheaper option will become the most popular and while businesses may commit to more expensive, environmentally sustainable manufacturing techniques when times are good, they may revert to save money.
As such, while commercial factors are generally not considered valid R&D, keeping the costs down in manufacturing innovations is a core part of what would make the advance a success.
How should the manufacturing sector utilise R&D tax relief claims?
With the high level of technological uncertainty faced by the sector, innovators will need to be able to boldly take risks in order to succeed.
R&D tax reliefs can support this by being a faster way of offsetting costs than selling a finalised service and they are not bound by commercial success.
Consumable costs, including fuel, energy and water, can all be included in an R&D tax relief claim.
This means the cost of any object that is irreversibly changed or destroyed during R&D can be included, provided it is not sold commercially afterwards.
For manufacturers, the inclusion of consumable costs means that innovative systems can be thoroughly tested without the costs of the ruined items from failed experiments weighing too heavily.
As R&D tax consultants, we have seen the way that R&D tax relief claims can empower businesses to establish a pathway to future innovation.
The costs incurred from one stage of innovation acquire the funds needed to get started on the next stage.
Approach the future of manufacturing with confidence by speaking to our team today.
Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.
Sign up to our Newsletter
Stay ahead with the latest R&D tax insights, funding updates, and innovation trends — straight to your inbox.
