R&D tax credits > Client sectors > Manufacturing

R&D tax credits for the manufacturing sector

Manufacturers benefit from the highest average R&D claim value. Their R&D activity stretches from product development, production line speed and resource improvement, quality control and compliance. Each incremental challenge and solution sought can qualify as R&D.

13,965

claims

£1,465

million

£104,905

Average claim value

What qualifies as R&D in the manufacturing sector?

Taking, for example, the food and drink sector, we find qualifying R&D expenditure in activities like increasing shelf life, reducing (or increasing) sugar or alcohol content without impairing flavour or the development of new or improved bottling or canning processes. Lots of businesses are working to improve the health and nutritional profile of food and drink products, often to meet current legislation in non-routine ways.

More generally we see manufacturers developing new processes to scale up to make larger volumes, which may be based on small batch trials and may involve a pilot to investigate a concept or new process. Manufacturers often trial and test materials, components, substances ,chemicals, non-routine prototypes, methods or techniques. And of course there is innovation in streamlining manufacturing processes through automation.

Improvements to product packaging can also qualify as R&D if they represent a functional improvement, not just a design feature.

R&D can also come in the transfer of existing technology or adaptation of new technologies from other industries for novel applications to improve manufacturing processes or products.

This sector includes the following types of business.

  • Manufacture of food products including dairy and bakery
  • Manufacture of beverages – including brewing and distillery
  • Manufacture of chemicals and chemical products
  • Manufacture of electrical equipment
  • Manufacture of motor vehicles

Yes, manufacturing companies can claim under either scheme depending on their size and other deciding factors. Of the R&D tax relief claims made in 2018-19 so far, 85% of them were under the SME scheme equating to 41% of the value claimed.

Yes, manufacturing companies that have already claimed for R&D tax credits might find that they could claim even more by applying for corporate tax relief under the Patent Box scheme. In 2018-19, so far, 645 companies claimed under Patent Box, totalling £272 million in benefit.

Manufacturing sector businesses

Software developers

Telecoms

Fintech

Manufacturing sector case studies

Goodchild Marine​

Industry: Manufacturing,

  • GovGrant helped their client understand the criteria for qualifying for Research and Development tax relief
  • The client realised that some of their ‘day to day’ activities were in fact innovative and claimable under the R&D tax credit scheme

Read full Goodchild Marine case study 

HL Plastics Ltd​

Industry: PVCu extrusions manufacturer

  • We effectively identified and maximised the qualifying R&D activity across the mix of completed, ongoing and failed projects
  • More than that GovGrant was able to significantly broaden the potential scope of qualifying IP revenue included in the client’s annual Patent Box tax relief claim

Read full HL Plastics case study 

Hone-All Precision Ltd​

Industry: Manufacturing

  • The client was initially dubious about being able to claim for process improvements
  • GovGrant used their knowledge and expertise to help the client claim R&D tax relief, and the improvements created greater efficiency within their business

Read full Hone-All Precision Ltd case study  

Warden Plastics​

Industry: Plastics Manufacturing

  • Claims were made for two major R&D projects
  • Warden received a cheque for a five-figure sum within six months of starting the claims process

Read full Warden Plastics case study