The statistics published by HMRC for 2021-22 are provisional and have been uplifted to include estimates for claims not yet received.
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.
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 2021-22 so far, 84% of them were under the SME scheme equating to 51% of the value claimed.
Yes, manufacturing companies that have already claimed R&D tax credits might find that they could claim even more by applying for Corporation Tax relief under the Patent Box scheme. In 2021-22, so far, 920 companies elected into Patent Box, claiming £597 million in benefit.
Industry: PVCu extrusions manufacturer
Industry: Plastics Manufacturing