With the economic impact of Brexit and the lingering pressures of the global pandemic, UK manufacturing has in recent times been exposed to unprecedented market forces. Mounting skill shortages and increased labour costs, coupled with the drive to achieve ambitious net zero targets means there has never been a more critical time to innovate.
The defining feature of research and development is that the competent professional does not know, in advance, exactly how to accomplish their desired end-result. As a result, higher R&D spending does not guarantee higher profit or a greater market share. In fact, R&D is the riskiest aspect of a business to finance because development and its successful realisation in the marketplace carries substantial technical and financial uncertainty.
The UK is currently the ninth largest manufacturing nation in the world. The movement towards automation, digitisation and new materials creates significant opportunities for tax reliefs and incentives for the taxpayer in this sector. Almost all manufacturing businesses are focussed on improving products and processes. Activities include streamlining operations, increasing production, eliminating waste, improving technology, reducing costs and optimising output.
In such an R&D intense sector, the R&D tax relief scheme is an invaluable funding tool, which, if managed correctly, will support a company’s innovation and future competitive edge. Certainly, the R&D tax relief scheme is nothing new, but with HMRCs changed approach, a new era for R&D tax relief has emerged. It has never been more important to seek professional, expert advice in this area of taxation.
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