R&D Tax Credits for the engineering industry

What are R&D engineering tax credits and why make a claim?

R&D tax credits are an incentive provided by the UK government to reward companies undertaking innovation and development activities. The relief is based on the R&D costs that your company incurs and can be used to either reduce the amount of tax that your company pays or to receive a cash payment from HMRC.

What activities qualify as R&D in the engineering sector?

The following engineering activities could be eligible for R&D tax credits:

• Adapting equipment or processes to meet new regulatory requirements e.g. fire, health & safety, sound and thermal.
• Creating and deploying new mechanical and electrical systems into buildings.
• Creating or experimenting with new materials to provide a novel solution to meet your client’s needs.
• Developing new or improved equipment to reduce energy consumption or losses.
• Developing new or improved technology to incorporate into a client’s product.
• Developing new scientific knowledge to reduce impact of waste systems. 
• Enhancing structural or mechanical technologies to overcome challenges within a project.

Activities covered under the R&D scheme are far broader than many businesses realise and there may be more activities that are not listed above that qualify. The drivers for innovation do not need to be technical in nature but if the solution being sought involves technical or scientific challenges then it‘s worth investigating whether this expenditure might qualify for R&D tax credits. Speak to one of our R&D tax advisers today and we’ll help you identify eligible activities.

Can my engineering businesses qualify? 

As long as you’re undertaking development activities that seek to achieve an advance in science or technology, or activities that directly contribute to advances by resolving scientific or technological uncertainty, any business in the engineering sector can claim R&D. This includes:

If you feel that your business is undertaking work that may qualify, get in touch to arrange a free scoping call to help you understand the potential benefit in making an R&D tax credit claim. 

Is it possible to claim for client projects in your engineering R&D tax credit claim?

We’re often asked whether it is possible to claim R&D tax credits for work where a client is paying the company. It is possible to make a claim for these paid projects in certain circumstances, but it is also very easy to get your claim wrong. If your company is a small business funded or contracted to work, you can claim under the large company scheme. This will be less beneficial so we can help you navigate the legislation to see whether an SME scheme claim is possible. However, for a larger business there will be no funding distinction, so your business is likely to be missing out if you have excluded client work. This area of the legislation is complex, and we can help your business successfully submit a claim for client work.

How we can help

We're here to fully support you with preparing and claiming R&D tax credits. Should you choose to get specialist R&D support from Buzzacott, we will identify what scheme your business qualifies for, carry out a comprehensive review of your R&D activity, working with you to ensure you are maximising your claim, prepare a claim that minimises your potential exposure to a HMRC enquiry, aim to fast track your claim and avoid delays in receiving your benefit, and guide you through the whole claim process or on certain aspects of the claim.

We also work with you to assist in identifying other sources of R&D support and help with planning your R&D strategy, taking into account incentives and grants that might be available. By offering this holistic view of the innovation support needs, we can assist throughout the business lifecycle. Our R&D team at Buzzacott support businesses throughout the year, not just when it’s time to prepare the next R&D claim. 

We take time to listen to your business to understand the goal you’re trying to achieve with your innovation, so we can help you overcome problems and challenges along the way. By being open and honest, we aren’t afraid to challenge our clients to make sure that your claim is correct and you’ve optimised the benefit. We want to help you understand your eligible activities, without holding you up, so you know how to build a robust R&D claim.

Other incentives available to engineering companies

Businesses in the engineering sector should be looking at all R&D incentives to support you through the engineering lifecycle. To find out more about these incentives, please click the links below.

Get in touch

If you would like to speak to one of our R&D experts to find out more about how we can help, please get in touch via the form below or call +44 (0)20 7710 3330.