What type of manufacturing projects qualify for R&D tax relief?

Common examples of product and process development projects that may qualify for R&D tax relief include:

  • innovative product development using computer-aided design tools;
  • development of second generation or improved products;
  • tooling and equipment fixture design and development;
  • developing unique computer numerical control programs;
  • designing innovative programmable logic controllers;
  • designing innovative manufacturing equipment;
  • prototyping and three-dimensional solid modelling;
  • designing and developing cost-effective and innovative operational processes;
  • integrating new materials to improve product performance and manufacturing processes;
  • evaluating and determining the most efficient flow of material;
  • designing and evaluating process alternatives;
  • designing, constructing, and testing product prototypes;
  • developing processes that would meet increasing regulatory requirements; or,
  • streamlining manufacturing processes through automation.

What type of software projects qualify for R&D tax relief?

Here are some useful examples of software development projects that may qualify for R&D tax relief:

  • creating bespoke software for new projects or creating new functionality for existing R&D projects;
  • adapting or creating extensions to database software, programming languages, or operating systems;
  • software development tools, such as tools to port data across platforms, tools for image processing or character recognition;
  • innovative methods of capturing, transmitting, manipulating, and protecting data;
  • software to run new computer hardware;
  • software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets; or,
  • means of integrating hardware and software platforms.

What if some of the R&D work carried out was funded by a grant or subsidiary

It really depends on the terms of the grant / subsidiary. If for example you received a grant for £10,000 but you would be eligible for R&D tax relief of £15,000 then in many cases the logical choice would be to pursue the HMRC tax credit route.

We can discuss viable options with you and advise on what would potentially be best for you and your company.

What if the research and development our company conducted was sub-contracted to us?

If you are conducting R&D on behalf of a client and they are paying for all materials, wastage and prototypes as well as the software licences to develop the product then it would not be eligible.

However, if you are investing in processes to produce a product / service for an end client then this would potentially be eligible and therefore a claim could be submitted.

How far back can I make a claim for R&D tax credits?

Companies can claim for the current accounting year they are in and also the previous accounting year which makes 2 years in total. This is subject to your financial year end so it is always worth asking if you can claim for multiple years.

How much will it cost toclaim for my R&D tax credit?

Our fee is only due upon your successful claim. We carry out the whole process for FREE and supply your accountant with the claim details ready for submission to HMRC. We then only charge a Success Fee of 25% when your first claim has been approved (20% for future years – as most companies can claim each year).

What is HMRC’s R&D Tax Credit Incentive?

It is an incentive set up by HMRC in 2000 to stimulate growth and innovation within the UK economy. It is aimed at UK limited businesses from start-ups to established companies to encourage growth through a potential tax refund / tax credit for any development work carried out. The teams at Counting King & RDS work with you to establish if you are eligible for this incentive from HMRC (with no upfront fees).