Tax Relief for the Manufacturing Industry

Innovation Funding for Manufacturing Businesses

In the UK, almost three-quarters of research and development (R&D) hails from innovative manufacturing firms. Even though innovations often result in business growth and new opportunities, creating and/or adapting processes or products and generating an industry advancement can be costly. The UK government has several tax relief schemes to support manufacturers, including R&D tax credits, capital allowances, and the Patent Box. But why should you invest in innovation in the first place?  

Manufacturing is not without its obstacles and challenges, from navigating labour shortages and supply chain issues to adapting to support the UK’s race to net zero. The manufacturing industry must maintain resilience and agility during adversity, and innovation is one of the keys to overcoming these threats. Industry 4.0 and digitalisation of the industry are transforming manufacturing, with the smart factory presenting opportunities, advancements, and exciting ways to innovate. 

Ryan’s tax professionals and sector specialists offer expert industry insight and support manufacturing businesses, like yours, to navigate the shift to Industry 4.0 and access HM Revenue and Customs (HMRC) tax relief to fund innovation and business growth.

R&D in Manufacturing and Engineering

In manufacturing, innovation leads to increased productivity, efficiency, and progress. The sector is advancing and growing because of innovative ideas and solutions—the emergence of new technologies heightens the industry’s transformation and highlights the need for manufacturers to continue to innovate to stay relevant and ahead of the game.  

Here are some examples of manufacturing and engineering R&D: 

  • Modifying existing processes or systems to improve capacity and performance

  • Digitising machining processes

  • Developing new materials, products, or processes to improve manufacturing

  • Designing and developing tools and equipment to advance the industry

    How Can You Fund R&D in Manufacturing and Engineering?

    There are various forms of innovation funding available to enable manufacturing and engineering R&D to take place, including grant funding and tax relief. Grants, usually nonrepayable, are awarded by funding bodies prior to any innovation taking place, whilst tax relief is a retrospective incentive, claimable after the accounting period in which the R&D took place.  

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    Grant Funding

    Any business that’s investing time and resources into innovative R&D in the UK can apply for and access UK/EU grant funding. There are various funding bodies, such as Innovate UK and the European Innovation Council, which provide funding competitions for businesses to access funding to innovate and grow.
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    The Patent Box

    The Patent Box is a government tax relief scheme that rewards companies for investing in innovation. If a company is making a profit on patented inventions, it’s eligible for a lower effective corporation tax rate of 10% on relevant profits. What’s more, if a company is eligible for the Patent Box tax relief regime, it’s likely that it’s also eligible for R&D tax relief.
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    R&D Tax Relief

    HMRC’s R&D tax relief scheme rewards businesses that are seeking an advance within their industry. R&D tax credits can be claimed by businesses that are developing new systems, products, or processes or modifying existing ones, which in turn create a scientific or technological advancement.

    Ryan’s Sector Specialist:

    Adam Malone, Consultant, R&D Technical

    Educated to degree level, Adam has been in senior roles in manufacturing for more than 18 years, with 10 of those years being in the automotive and defence industries. He has worked for a variety of companies, including startups, micro, family-run small and medium-sized enterprises (SMEs), acquired SMEs, and global corporations, which gives him an extensive and wide-ranging body of experience on the different challenges faced by each organisation. His experience covers a variety of sectors such as power supply units, military vehicles and robots, hydraulic systems, waste, and energy technology. 

    In addition to working on Urgent Operational Requirement projects for the Ministry of Defence (MOD), Adam has led and worked across large multidisciplinary teams on R&D projects, funded by Innovate UK and the Horizon Europe programme, with leading European academics and industrialists, and has been successful in accelerating projects through Technology Readiness Levels to industrial commercialisation, with a specialisation in metal forming. For eight years, Adam was responsible for identifying new technologies that could be commercialised, bid writing for funding opportunities, and not only managing and carrying out R&D activities but also submitting R&D tax relief claims to HMRC. He also has experience as a reporter at the European Parliament in Brussels and voluntary work experience at several well-known sports media companies.

    Your Innovation Funding Partner

    Ryan’s expert team can help to identify your eligibility for R&D tax relief, Patent Box, and grant funding, as well as capital allowances and land remediation relief. Together, we can engineer a brighter tomorrow for both your company and the manufacturing and engineering industry as a whole.

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