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Are R&D Tax Credits Available to Companies in my Sector?

The simple answer to this is yes. R&D tax credits are available to all companies in any sector. It is the activity undertaken that determines your eligibility, not the industry that you are in.

When you think about research and development activities, there are more traditional R&D centric sectors that spring to mind, namely manufacturing, technology and pharmaceutical. However, LimestoneGrey’s specialists have supported companies from sectors that you would not necessarily link with R&D including, construction, financial services, agriculture and retail.

Some of the Sectors LimestoneGrey have supported with their R&D Tax Credit Claim

As the relief is available to all sectors, we simply do not have the website space to look at each in turn. With that in mind, below is a snapshot of the type of activity you can expect to find for a selection of traditional R&D-rich sectors, along with potential projects for industries that are more uncommonly aligned with research and development.

Accommodation and Food

Average Value for claim:

29557

The initial activity that pops into your head when you think about food and drink innovation is the development of new recipes. However, if you are trying to cement your commercial position by achieving a tastier dish than your competitor, you will not be solving a technical or scientific challenge or uncertainty so you will not have the basis of an R&D tax credit claim.

There are circumstances where changing or improving a recipe may qualify. If your end goal is to:

  • Improve a product’s shelf life by changing the balance of ingredients
  • Reduce the sugar content of a product whilst maintaining the taste
  • Replacing an ingredient in a product that is either no longer available or has been affected by industry-standard updates

You need to have attempted to overcome challenges of a technical or scientific nature.

Admin & Support Services

Average Value for claim:

56150

In the digital age that we live in, there has been a rise in technologies that allow companies to offer their services online as well as face to face, in areas such as:

  • Rental & leasing activities
  • Employment activities
  • Travel agencies and other reservations services
  • Security and investigation activities
  • Office administration, support and other business support

Agriculture, Forestry & Fishing

Average Value for claim:

49180

Agriculture innovation, or Argi-Tech, is a prime example of how new age technologies are enhancing the performance of traditional sectors, utilising their power to solve issues facing the sector. Issues that need to be solved can include:

  • The implementation and efficiency of crop rotation
  • Growing of crops
  • The complexities surrounding animal production

Arts, Entertainment & Recreation

Average Value for claim:

85712

In a time that every industry is having to evolve to reach their audience, research and development activities can assist in improving accessibility to existing and potential clients and improve relationship building. R&D projects that meet these objectives could include making administrative processes more efficient, including booking systems.

Construction

Average Value for claim:

48408

When you hear the words ‘construction’ your thoughts initially go to design elements and the aesthetic outcomes. However, you need to think outside of the box. The engineering advances and the possibilities of research and development are huge.

The construction industry is one that can provide large amounts of uncertainties and it’s in these head-scratching moments that innovation occurs. The kind of uncertainty you may face in this sector could relate to:

  • Unusual, unique or difficult environmental or ground conditions
  • Modern methods of construction and new materials
  • The application of modularisation

Education

Average Value for claim:

36145

The pandemic showed how vital it is to have technology innovation in this sector, allowing communities to be remotely connected but still undertake the same quality of learning as if in a face-to-face setting. Examples of such technology could include:

  • Incorporation of VR and AR into learning platforms
  • Adaptation and improvement of remote learning platforms

Electricity, Gas, Steam & Air Conditioning

Average Value for claim:

90909

In an industry that is striving for sustainable alternatives, there are no larger claims than in the electricity, gas, steam and air conditioning sector. There are endless examples of potential research and development activities in this sector:

  • Increasing energy plant production using less input materials
  • Scaling from a prototype energy system to one which is commercially viable
  • Reducing noise and vibrations in a system

Financial Services

Average Value for claim:

108225

With vast developments in technology and artificial intelligence within the financial services industry, it’s no wonder that it’s one of the highest average claims amongst the sectors. Some eligible activities for R&D claims could include:

  • B2B platforms based on a new language
  • New or improved payment protocols between servers and terminals
  • Development of algorithms for fraud detection and prevention

Health & Social Work

Average Value for claim:

40541

When a sector is solely working to benefit the population, it’s likely that companies within the sector will be working on qualifying research and development activities. Some of the qualifying projects could include:

  • The development and testing of medication and new treatments
  • Specialist orthopaedic seat manufacture
  • New programmes to aid in rehabilitation

Information, Communication Technology (ICT)

Average Value for claim:

72346

The ICT sector is vast and the activity is just as varied. Traditionally technical in nature, the industry ethos is centred around improvements and best practices. Examples of R&D activity in this sector could include:

  • Advancements in cybersecurity
  • System and software development

Manufacturing

Average Value for claim:

50329

Businesses in the manufacturing sector produce a wide variety of outputs, ranging from food and drink to chemicals and motor vehicles. Manufacturer’s R&D activity stretches from product development to accelerating production line speed, resource improvement and even quality control. Each challenge that this sector faces with a solution sought could qualify for R&D tax relief, including:

  • Improving the production line speed without sacrificing quality control
  • Making enhancements to machinery to improve cost efficiency
  • Traditional product development

Professional, Scientific & Technical

Average Value for claim:

81582

It may not come as a surprise that this sector is utilising the benefits of R&D tax relief. These firms can use cash injections received to fast track future projects, helping to develop and test new products, materials and technologies such as:

  • Scientific research including pharmaceutical and biotech activity
  • Development of new or alternative materials
  • Development of new or improved testing processes

Real Estate

Average Value for claim:

35714

Working in real estate and property often requires you to be creative and innovative. There are a number of qualifying practices that could be included in your R&D tax claim including:

  • Property house builders working with listed buildings
  • Property house builders developing eco-housing designs and materials

Transport & Storage

Average Value for claim:

60000

The transport sector is at an exciting stage of rapid development. The opportunities available from evolving technologies such as new high-speed rail networks and autonomous vehicles dramatically benefit the UK economy. Further examples of potential R&D activity in this sector could include:

  • The development and implementation of emissions monitoring systems
  • The development of technologies to support congestion zone charges
  • The development of more efficient cold storage transportation systems

Water, Sewerage & Waste

Average Value for claim:

60345

Water and waste efficiency is quickly becoming an issue for many industries. Innovation in better waste management not only protects the environment but also saves money. Some activities that could be included in your R&D tax credit claim are:

  • Development of new and improved recycling processes
  • Development of new products or materials derived from recycled waste
  • Development of new water, sewerage and waste treatment technologies

Wholesale & Retail

Average Value for claim:

39375

A number of retailers and wholesalers will be developing solutions that automate, streamline and speed up their operations. The technical processes and software that is developed to assist with managing orders, controlling stock levels or helping delivery could qualify as R&D.

Please note: the figures shown above are average values for an SME R&D tax credit claim for a UK company.