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R&D tax credits for the manufacturing and food industries

Manufacturers benefit from the highest average R&D claim value. Their R&D activity stretches from product development, production line speed and resource improvement, quality control and compliance. Each incremental challenge and solution sought can qualify as R&D.




millions in claim value


Average claim value

Source HMRC R&D tax credits statistics 2023

The statistics published by HMRC for 2021-22 are provisional and have been uplifted to include estimates for claims not yet received.

What qualifies as R&D in the manufacturing sector?

Taking, for example, the food and drink sector, we find qualifying R&D expenditure in activities like increasing shelf life, reducing (or increasing) sugar or alcohol content without impairing flavour or the development of new or improved bottling or canning processes. Lots of businesses are working to improve the health and nutritional profile of food and drink products, often to meet current legislation in non-routine ways.

More generally we see manufacturers developing new processes to scale up to make larger volumes, which may be based on small batch trials and may involve a pilot to investigate a concept or new process. Manufacturers often trial and test materials, components, substances ,chemicals, non-routine prototypes, methods or techniques. And of course there is innovation in streamlining manufacturing processes through automation.

Improvements to product packaging can also qualify as R&D if they represent a functional improvement, not just a design feature.

R&D can also come in the transfer of existing technology or adaptation of new technologies from other industries for novel applications to improve manufacturing processes or products.

This sector includes the following types of business.

  • Manufacture of food products including dairy and bakery
  • Manufacture of beverages – including brewing and distillery
  • Manufacture of chemicals and chemical products
  • Manufacture of electrical equipment
  • Manufacture of motor vehicles

Yes, manufacturing companies can claim under either scheme depending on their size and other deciding factors. Of the R&D tax relief claims made in 2021-22 so far, 84% of them were under the SME scheme equating to 51% of the value claimed.

Yes, manufacturing companies that have already claimed R&D tax credits might find that they could claim even more by applying for corporate tax relief under the Patent Box scheme. In 2021-22, so far, 920 companies elected into Patent Box, claiming £597 million in benefit.

Manufacturing sector case studies

Goodchild Marine​

Industry: Manufacturing

  • Source Advisors helped their client understand the criteria for qualifying for Research and Development tax relief
  • The client realised that some of their ‘day to day’ activities were in fact innovative and claimable under the R&D tax credit scheme

Read full Goodchild Marine case study 

R&D case study Goodchild Marine logo

HL Plastics Ltd​

Industry: PVCu extrusions manufacturer

  • We effectively identified and optimised the qualifying R&D activity across the mix of completed, ongoing, and failed projects
  • More than that Source Advisors was able to significantly broaden the potential scope of qualifying IP revenue included in the client’s annual Patent Box tax relief claim

Read full HL Plastics case study 

R&D case study HL Plastics logo

Hone-All Precision Ltd​

Industry: Manufacturing

  • The client was initially dubious about being able to claim for process improvements
  • Source Advisors used their knowledge and expertise to help the client claim R&D tax relief, and the improvements created greater efficiency within their business

Read full Hone-All Precision Ltd case study  

R&D case study Hone All Precision logo

Warden Plastics​

Industry: Plastics Manufacturing

  • Claims were made for two major R&D projects
  • Warden received a cheque for a five-figure sum within six months of starting the claims process

Read full Warden Plastics case study  

R&D case study Warden Plastics logo

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