R&D tax credits for engineering

Claiming R&D credits in the engineering sector

If your company is in the engineering sector and you have created or improved a product or process in the past 3 years, then there is a good chance that you are eligible to claim a significant annual pay-out through the government’s R&D tax credit scheme. Civil engineering firms routinely push the limits of their technical knowledge and are required to design, prototype and test various solutions extensively until the right solution is reached.

Many engineering firms do not realise that their projects may enable them to claim significant annual pay-outs through the government’s R&D tax credit scheme.

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Are you eligible for R&D tax relief?

  • Does your business employ less than 500 people and turnover less than £75 million?

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R&D tax credits for engineering

Overview

Almost any type of engineering firms could be eligible providing that their projects and activities meet the criteria and they pay Corporation Tax in the UK. Engineering subsectors that are rich in opportunities for claiming include:

  • Aerospace & Avionics
  • Architectural Engineering
  • Automotive Engineering
  • Biochemical Engineering
  • Building and Construction Engineering
  • Chemical and Engineering
  • Civil Engineering
  • Defence Technology Engineering
  • Electrical and Electronics Engineering
  • Environmental Engineering
  • Geotechnical Engineering
  • Hydrology Engineering
  • Manufacturing Engineering
  • Marine Engineering
  • Materials Engineering
  • Mechanical Engineering
  • Petroleum, Oil & Gas Engineering
  • Plant Engineering
  • Power Engineering
  • Rail Engineering
  • Software Engineering*
  • Surveying Engineering
  • Systems Engineering
  • Telecoms and Networks Engineering
  • Transportation Engineering

What types of engineering projects and activities qualify?

The government’s guidelines for what activities qualify for R&D relief are broad, though each claim will be assessed by HMRC on its own merits. It is often not a simple matter to determine what you should and should not claim for. As a baseline requirement, a qualifying project must seek an ‘advance in science or technology’ and have ‘had to overcome technical or scientific uncertainty’.

In the engineering context, your project stands a good chance of qualifying if:

  • It involves creating new designs or prototypes
  • It involves the use of new materials or a new combination of materials
  • It results in an appreciable improvement to an existing product or process
  • It results in streamlining a process through automation
  • It is implemented in a unique or challenging environment
  • It involves a new or improved design of machinery, component or electronic products
  • It involves going through multiple technical iterations before going into production

These are just a few typical examples though they should not be interpreted as projects that will automatically qualify.

Tips on claiming R&D tax credits in the engineering sector:

  • You are able to submit claims for projects that took place up to 2 accounting periods ago and all subsequent projects. Any projects that took place before that will not be eligible.
  • You can claim once a year for future eligible projects
  • The value of your claim will depend on a number of factors. The main factor is expenditure – the amount that the eligible activities cost your firm
  • You can expect to claim about 26% of qualifying expenditure
  • Qualifying expenditure can include salaries, contractor costs, subcontractor costs and consumables / scrapped materials/ prototype coss
  • The qualifying activities can take place anywhere in the world, but must be funded by a UK-registered business

How we can help

By choosing Innovation Plus as your R&D tax credit claim partner you will benefit from:

  • An expert team that will take care of the entire claim process and build an optimal claim around all your eligible engineering projects
  • The assurance that your claim will be successful. We have maintained 100% success record for claiming on behalf of our clients since 2009.
  • An optimal claims process that will maximise the value of your claim
  • Our in-house financial, legislative and technical experts, all under one roof
  • Being able to leverage our excellent working relationship with the R&D tax inspectors underpinned by the excellent quality of our claims

We can give you a definitive answer on your eligibility and the overall R&D tax position of your engineering firm through an obligation-free phone consultation – simply contact us to arrange this.

Did you know?

  • Engineering is classified under the government's "Professional Services" sector

  • The total annual amount claimed in this sector is currently £525 million

  • The average annual amount for a single R&D claim in this sector is £129,000

  • Less than 2% of the annual R&D tax credits came from UK engineering firms