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Textiles & Fabrics

Textiles R&D Tax Credits

The textile industry goes beyond fashion apparel. Important innovations are often made for medical materials, and sustainable fabrics such as hemp are becoming more and more ethically valued.

Innovations and experiments in textile products and processes deserve to be, and indeed are, rewarded through research and development (R&D) tax credits. R&D tax credits often go unclaimed because people simply are not aware of being able to do so. And within the textile industry, textile and garment businesses may not realise exactly what activities are eligible.

Seek the expertise of randd, who not only offer best-in-class knowledge for textiles R&D tax relief but do the legwork for your claim and uncover even the unobvious qualifying activities to maximise your reward.

What Projects Qualify For Textiles R&D Tax Relief?

  • Design and development of new products and processes 
  • Technical improvements to existing products – durability, comfort, performance etc
  • Improvement within existing processes – cost, speed, efficiency, sustainability, less waste etc  
  • Prototyping and 3D modelling activities 
  • Testing and experimenting with new materials
  • Altering an existing fabric for a new purpose 
  • Modification or development of machinery  
  • Development of computer-controlled equipment 
  • Improving sustainability of new and existing products and processes 
  • Extra time/cost to meet regulatory requirements
  • Development of safety equipment, new and existing 
  • Improved dye and screen-printing techniques
  • Development or modification of for-purpose products – water-resistant, hypoallergenic, thermal etc 
  • Enhanced PPE and safety wear improvements
  • Payroll for specialist staff and third-party contractors 

Did you know?

Simply attempting to innovate, without succeeding, may still be means of textiles R&D tax relief eligibility.

What Costs Are Covered For Textiles R&D Tax Relief?

Specific costs can be subjective, and a case will have to be made for each activity you are claiming for. This can be facilitated with randd’s professional help. Covered costs typically consist of manufacturing, staff costs, technologies, products and premises. Some covered costs may not be realised by business owners, that only an R&D expert could spot. Without expert knowledge, you could lose out on extra rewards or miss out entirely.

Eligibility For Claiming Textiles R&D Tax Relief

Currently, there are two types of R&D tax relief, different for SMEs and larger enterprises (RDEC scheme).

Main qualifying criteria:

  • Limited company certified
  • Registered for corporate tax
  • < €100M annual turnover or < €86M balance sheet
  • Not in receipt of subsidy control (for the R&D project)

RDEC specific criteria:

  • > 500 members of staff
  • Expenditure credit is calculated at a rate of 20% of the company’s qualifying R&D expenditure.

SME specific criteria:

  • < 500 members of staff
  • If R&D expenditure is at least 40% of total expenditure, a higher payable tax credit rate of 14.5% can be claimed.

* Having external investors may affect your SME status
Randd provides expert support for both types of tax relief.

The R&D tax structure is due to change in April 2024 based on the percentage of business expenditure spent on R&D purposes. Therefore, seeking professional expertise is advised.

A sewing machine in operation, part of the clothing industry production process.

Successful Textiles R&D Tax Claims

Tax Relief For Tweed Weaver

A Carlisle-based tweed weaver has claimed £274,000 in R&D tax credits over six years with the latest addition of over £66,000. The well-established company designs and manufactures innovative fabrics for the women’s fashion industry. Trialling combinations of multiple yarns with hugely differing characteristics such as manufacturing process, dyeing or washing shows innovative thinking. An experienced workforce with unique skillsets undertakes trial and error and problem solving with the aim of reducing costs, enhancing quality and improving sustainability. Previous R&D Tax Credits have enabled the company to become ever more innovative and more likely to invest in newer capital equipment to help it maintain its position as a world leader in specialist fabrics.

Assorted colorful upholstery fabric samples displayed on a surface.

Expert Support Claiming Textiles R&D Tax Relief

Understanding your eligibility and non-eligibility for textile R&D tax relief can be painstaking. A case must be built, alongside completion of arduous tax credit forms.

With an average of £50,000 earned per case, randd has helped claim back millions for UK businesses.

We are passionate about rewarding innovation, and our expertise in R&D tax will help maximise the potential amount of tax relief you receive.

Contact our team of experts by calling us on 01332 409 711 or emailing claim@randduk.com