6TH AUGUST, 2019

Quick Guide to R&D Tax Reliefs in Engineering

Engineering is the mainstay of global development, and UK engineering in particular is a fast-paced sector with exciting and diverse opportunities for innovation. Indeed, companies involved in all aspects of engineering are continually making investments in research and development (R&D) to fill gaps in technology and solve a massive range of complex problems.

The UK has proudly lead the way during the last several decades in particular, in everything from aerospace and motorsport to pharmaceutical and mechanical engineering and more. It’s a sector that offers employment for large numbers of people in this country across multi-disciplinary, multi-site, multi-cultural teams.

With the world’s population growing and people expecting the greenest cars, most efficient ways of working and safer, faster transport networks, engineers are essential for building and maintaining the very bedrock of civilised society.

What fields does UK engineering cover?

As mentioned, the engineering sector covers a vast range of disciplines, including aerospace, biochemical, civil, military, marine, electrical, railway and software engineering just to name a few. With around 1.7 million people being employed in the UK engineering sector, it’s hardly surprising that it provides a huge amount of revenue to the country’s economy - around half a trillion pounds every year in fact.

R&D is vital to every sector within engineering as so much of the industry is about developing new products, next generation medical solutions and cutting edge infrastructure. Additionally, technology that has been around for a while will always need engineering commitment to upgrade and maintain it, and processes to be renewed and streamlined.

What does R&D mean for engineering?

If we look a little bit closer, it’s easy to determine that R&D occurs during pretty much every part of an engineering project. During a project’s early stages, once technical goals have been defined, R&D could involve for example the identification of the risks, benefits and feasibility studies required to see the work through. When it comes to development, R&D is very likely to be required in the design work (both digital and physical), as well as the building process and ongoing analysis. Large scale projects are commonplace when it comes to engineering with a large amount of effort going into computer modelling and software development to create various designs and solutions. In some areas of the industry, there can also be substantial time and resource spent on building prototypes and carrying out product tests too. All of this designing and testing work will help to manage the risks involved with the project and is especially vital in R&D projects, where the outcome could potentially be uncertain. Indeed, even once the project is complete, further technical testing, patches, adjustments, remedial work and ongoing maintenance could be needed which would also come under the umbrella of R&D.

What’s available for engineering firms in terms of R&D Tax Credits?

R&D Tax Credits have been in existence since the year 2000 for companies large and small, and offer vital financial support across engineering as well as many other UK industries. They are essentially a government-back tax incentive which allows companies to claim back some of their corporation tax, either as a rebate or as a lump sum, to cover R&D costs.

The idea behind R&D Tax Credits is that they boost innovation as well as encourage economic growth, which in turn helps the UK to compete globally. In fact, R&D Tax Credits are estimated to have contributed as much as £8.1 billion to the UK economy in 2017 according to HMRC’s most recent statistics.

What are the two types of R&D tax relief schemes currently in existence?

Depending on your business size and type, there are two different R&D schemes on offer: the RDEC scheme and the SME scheme.

The SME scheme is designed for businesses with 500 employees or less. Companies using this scheme should also not have any more than €86 million in gross assets or make over €100 million in turnover. The RDEC scheme on the other hand is similar but is aimed at companies where the SME criteria will not be met (generally speaking these are much larger organisations). However, the RDEC scheme can also apply to companies that are not able to take advantage of the SME scheme for other reasons, for example if they have received certain types of grant. Although there can be quite some time and effort involved in making the application for support, a successful claim can have a hugely positive effect on both the project and the business in general.

Aside from the obviously very helpful cash injection, claiming R&D Tax Credits can help to enable a strong R&D culture within your company. By making R&D an important element of your decision-making processes, it puts you in good stead to offer a highly stimulating workplace for staff, calculate your risks and make more informed spending decisions.

Identifying qualifying costs for engineering R&D tax credit claims

R&D could be part of any project where a business is making attempts to resolve a particular technological or scientific uncertainty or to gain further knowledge and understanding of something specific in the field. However, even with R&D Tax Credits being applied to a very large and fluid number of project types, it’s still useful to understand what kind of engineering projects qualify for R&D tax credits especially if you’ve never made a claim before. This is where a chat with us at Tax Cloud is highly recommended, as we can discuss your innovation plans and guide you towards success in your R&D Tax Credits application.

Staff, subcontractors and engineering R&D tax credit claims

Subcontractor costs and employing extra full and part time staff can be a significant expense for engineering companies taking on innovative projects, and are likely to make up a large part of any claim for tax relief. This is because very specific or niche skillsets may be required and specialist equipment could be needed at points throughout the project’s duration. This can all be a big part of the R&D and something for which a tax credit claim could be made.

Get in touch with the experts

The highly trained team at Myriad Associates created our Tax Cloud calculator with the sole aim of making R&D tax claims simple. With separate arms for both accountants and businesses, it’s designed to help you see exactly how much you can claim quickly and easily.

Take a look at the portal today, use our contact form or call us on 0207 118 6045 to discuss your options and speak to one of our R&D tax credit experts. Our experienced team will be very pleased to help.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
Latest posts
14TH OCTOBER, 2019 Flight Shame Has Landed - But Could R&D Be The Aviation Industry's Ticket To Greener Travel?
10TH OCTOBER, 2019 What power does HMRC have over my R&D Tax Credit payment?
1ST OCTOBER, 2019 Why Do Some Applications For R&D Tax Relief Fail?
24TH SEPTEMBER, 2019 R&D Tax Credits: What happens if I need to switch from the SME scheme to the RDEC scheme, or vice versa
17TH SEPTEMBER, 2019 What financial help is available in the UK for entrepreneurs?
10TH SEPTEMBER, 2019 What consumables can be claimed under R&D tax relief?
3RD SEPTEMBER, 2019 How long does it take for HMRC to make a decision on an R&D Tax Credit claim?
29TH AUGUST, 2019 What is the most efficient way of submitting an R&D Tax Credit claim?
21ST AUGUST, 2019 Are businesses in Wales getting the most out of the R&D Tax Credits scheme?
13TH AUGUST, 2019 How can companies find extra money to help prepare for a No Deal Brexit?
6TH AUGUST, 2019 Quick Guide to R&D Tax Reliefs in Engineering
31ST JULY, 2019 Claiming R&D tax credits in the healthcare sector
26TH JULY, 2019 How can businesses make R&D investment a priority?
18TH JULY, 2019 How will Brexit affect R&D tax credits?
12TH JULY, 2019 Tax Cloud launches in Ireland
5TH JULY, 2019 How to claim a critical tax boost for your SME
5TH JULY, 2019 R&D Tax Credits made simple and affordable
28TH JUNE, 2019 Why are SME’s missing out on R&D tax relief
14TH JUNE, 2019 Is my SME eligible for R&D Tax Credits?
3RD JUNE, 2019 Why Use an R&D Portal Over an R&D Advisor?
24TH MAY, 2019 How SMEs Can Benefit from R&D Tax Credits
14TH MAY, 2019 Charities Benefit Following Tax Cloud's Successful Show at Accountex
25TH APRIL, 2019 Tax Cloud's Most Innovative Companies 2019
12TH APRIL, 2019 Accidental Innovation - Tax Cloud's Top 8
5TH APRIL, 2019 A Practical Guide to R&D Tax Relief at Accountex 2019
27TH MARCH, 2019 What Software Projects Qualify for R&D Tax Credits?
15TH MARCH, 2019 3 Automotive Innovations To Look Out For In 2019
1ST MARCH, 2019 What is Research and Development in Business?
22ND FEBRUARY, 2019 Growth hack: Tap Into R&D tax credits
15TH FEBRUARY, 2019 Beyond R&D Tax Credits - public funding for your innovative start-up
1ST FEBRUARY, 2019 5 Steps To Deliver An Optimised R&D Tax Credit Claim
25TH JANUARY, 2019 Top Tax Cloud FAQs
16TH JANUARY, 2019 What Projects Qualify for R&D Tax Credits in The Medical Industry?
11TH JANUARY, 2019 Accounting practices are generating fee rates of £325/hr
2ND JANUARY, 2019 R&D Tax Credits - It's Not As Difficult As You Think
14TH DECEMBER, 2018 4 Ways To Determine If You Qualify For R&D Tax Credits
26TH NOVEMBER, 2018 What Projects Could Be Eligible For R&D Tax Relief in Manufacturing?
2ND NOVEMBER, 2018 How To Know If Your Business Is Entitled To R&D Tax Credits
25TH OCTOBER, 2018 Why Isn’t The Agricultural Industry Claiming R&D Tax Credits?
10TH OCTOBER, 2018 Is Your Business Eligible For R&D Tax Relief?
3RD OCTOBER, 2018 The Most Common Mistakes People Make With R&D Tax Credits
18TH SEPTEMBER, 2018 #1 R&D Tax Claim Portal ‘Tax Cloud’ launches Xero Integration
14TH SEPTEMBER, 2018 What To Look For In An Online R&D Tax Credits Claim Portal
7TH SEPTEMBER, 2018 5 Ways To Grow Your Accountancy Practice
31ST AUGUST, 2018 Common Pitfalls To Avoid While Claiming R&D Tax Credits
24TH AUGUST, 2018 How Far Back Can I Claim R&D Tax Credits?
17TH AUGUST, 2018 Should I Use a Specialist or My Accountant For My R&D Tax Credits Claim?
27TH JULY, 2018 3 Things To Consider When Making An R&D Tax Credits Claim
13TH JULY, 2018 R&D Tax Credits – Don’t Fall Through The HMRC Trapdoor
25TH JUNE, 2018 Tax Cloud Shortlisted for Innovation of the Year
30TH APRIL, 2018 Benefits of A Self-Service R&D Tax Credit Portal
13TH MARCH, 2018 R&D Tax Credits Platform Tax Cloud Celebrates 100 SME’s Seeking Expert Support
5TH FEBRUARY, 2018 How R&D Tax Credits Can Help Your Startup Grow
29TH JANUARY, 2018 Getting the Best Returns From Your R&D Tax Credits Claim
22ND JANUARY, 2018 Introducing: The Tax Cloud Partner Programme
18TH JANUARY, 2018 What Costs Can You Claim Through R&D Tax Credits?
9TH JANUARY, 2018 Common Misconceptions About R&D Tax Credit Claims
5TH DECEMBER, 2017 R&D Tax Credits Made Simple For Small Businesses
20TH NOVEMBER, 2017 The 3 Things You Need To Consider When Making An R&D Tax Credits Claim
Popular Tags
Start your Tax Cloud claim now Discover if you qualify and ensure your R&D tax claim is maximised. Get started
Powered by Myriad Logo

Myriad Associates helps businesses maximise tax reliefs and secure R&D grant funds. We specialise in R&D Tax Credits, Video Games Tax Relief, Innovate UK grants, Horizons 2020 grants, and Research and Development Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • 100% success rate
  • Over £100m claimed and counting
  • Industry leading specialists
  • In-house technical, costing and tax experts
  • Member of the Research and Development Consultative (RDCC) committee

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey David Farbey MA, FISTC, FRSA Technical Consultancy Director
Deborah Chapple Deborah Chapple ATT Corporate Tax Director
Lauren Olson Lauren Olson MA, MISTC Senior Technical Consultant