R&D tax credits for companies in the chemicals industry can be hugely important in providing extra capital that can be reinvested back into the business.
Chemicals R&D tax credits
Being a fundamental part of progress within the chemicals sector, research and development is vital in developing new and improved products that are frequently used in everyday life such as soaps, detergents and perfumes.
Innovation is critical in finding new ways for the chemicals industry to satisfy consumers who not only demand products of increasingly higher quality, but also want them to be environmentally friendly.
Chemicals R&D tax credits
R&D tax credits for companies in the chemicals industry can be hugely important in providing extra capital that can be reinvested back into the business.
Being a fundamental part of progress within the chemicals sector, research and development is vital in developing new and improved products that are frequently used in everyday life such as soaps, detergents and perfumes.
Innovation is critical in finding new ways for the chemicals industry to satisfy consumers who not only demand products of increasingly higher quality, but also want them to be environmentally friendly.
R&D in the chemicals industry
Chemical companies undertake R&D projects to seek more efficient production methods and safer practices – work which can be particularly expensive and therefore tax relief is a considerable benefit.
How much you can claim back in R&D tax credits will depend on the size of your business. For example, companies at the smaller end of the scale may focus on devoting resources to product development, safety validation and regulatory approval. Larger enterprises could be developing pilot plants for testing.
Activities relating to the safety, stability and packaging of chemical products often involves intensive R&D work and could qualify for a tax credits claim.
Benefits of claiming chemicals R&D tax credits
The purpose of the R&D tax credits scheme, which was introduced in 2000, was to help companies which strive to make technological advancements or solve scientific problems in their field and incur significant cost in doing so.
By aiding with their cashflow, the scheme not only enables businesses to grow but also encourages them to embrace a corporate philosophy of perpetual innovation and progression.
What qualifies for R&D tax credits in the chemicals industry?
Advancements in technology and research & development have enabled adhesive, sealants, chemicals and paints industries to progress. New materials and legislative requirements have compelled companies in this field to carry out R&D activities.
Examples of eligible R&D activities within the sector include:
- Developing or creating new products or processes
- Improving the quality of a product for quicker application, reducing labour time
- Meeting new legislative requirements
- Developing products that are cost-effective and meet customer demands
- Responding to market demands such as removing/reducing toxic chemicals
- Reducing carbon footprint and developing processes and products to become more energy efficient and reduce wastage
Eligibility for R&D tax credits in the chemicals industry
Provided your company is UK-registered, still trading and has undertaken qualifying R&D work, it can be eligible to qualify for tax relief.
The size of the company does not matter and nor does the sector it belongs to, as long as the research and development activity has tried to resolve a technological or scientific problem.
Your business will need to have a set of financial accounts and be subject to Corporation Tax.
Specific questions an R&D tax credits adviser such as randd would ask to try and establish your company’s eligibility before proceeding with a claim would be along the lines of:
- Have you developed new tools, products or services using technology?
- Have you tried to improve your existing products through technical changes?
- Have you had to resolve technical problems with any of your products?
- Have you found more efficient ways to produce your products or services?
- Have you experimented with new equipment or production techniques?
- At the outset of a project, did you ever think ‘I’m not sure of the best way to do this’?
- Have any of your projects failed for technical reasons?
A failure does not render your business ineligible for R&D tax credits, provided you have evidence of what the attempt constituted and the cost incurred.
Challenges of R&D in the chemicals industry
Among the issues a chemical company may try to address that could qualify for R&D tax credits are:
- Problems caused with variation in the quality, specification or strength of raw materials
- Reducing carbon dioxide emissions through technological changes
- Producing chemicals from renewable sources using green chemistry
- Process scale up from bench to plant manufacture
- Poor product yield
- Development of suitable separation technologies
- Conversion of lignin to aromatic compounds
- UV degradation coatings (e.g. in paints)
Chemical industry R&D successes
A leading manufacturer of thermal spraying equipment based in Dudley, West Midlands, has received a total amount of £509,000 in R&D tax credits, with a latest claim of £95,000.
As renowned experts in advanced innovative surface coating technology, the company is the only UK developer, manufacturer and worldwide supplier of a full range of metal spraying equipment and consumables.
Research and development is needed for developing new products for the industry and creating bespoke solutions for individual customers. Recognised as an award-winning company and partners of a trusted university, the company has progressed with R&D activities which have been further rewarded by randd and R&D tax credits.
Expert support claiming R&D tax credits
If you believe you qualify for an R&D chemicals tax credits claim, we would be happy to hear from you. Our experts can identify costs you may not think are eligible and we are ideally placed to manage the claim on your behalf.
We have an unparalleled claim success rate and nothing pleases us more than when our clients receive funds resulting from this government initiative that can help their companies to grow and push innovation.
Overseeing every step of the process from when you first contact us, our experts will minimise the impact on your day-to-day schedule so you can focus on the main priority – running your business successfully.
You can be sure your claim will receive our 100% attention. After an initial chat to help us determine your eligibility for an R&D chemicals tax claim, once we have established your business qualifies we will compile your case and make your submission to HMRC.
Contact our team of experts by calling us on 01332 409 711 or emailing [email protected]
