Funding help for design and innovation during a period of economic instability

With finances in small and medium sized businesses being stretched, make sure that all potential help is being utilised to be rewarded for innovation.

A cost-of-living crisis, increasing fuel bills, supply chain instability, constrained workforce availability….

These are all topics that we hear on news bulletins daily, and the knock-on effects are evident in industry as we still see a period of the sands settling after the return-to-work post-pandemic.

So, when the market is so volatile, should that mean, that industry should halt and attempts in advancements in products or processes? There is business analogy that standing still is the same as falling behind and that can be as simple as your competitor making that simple upgrade or has integrated a new feature that sets them apart from the crowd. Or it could be from a manufacturing process, or upgraded automation in shipping and logistics to find a way to streamline the process and reduce their costs to lower their go-to-market price?

Using an industry example, manufacturing alone accounts for 22% of the activity in R&D and it is easy to visualize why when you think of any manufacturing or production environment now versus how it may have looked five to ten years ago. It may previously have been a very manual process and workers tightly packed together. Now we can see automation, robotics, applied AI from systems and from the human side we now live with low-touch scenarios and physical distancing.

Information and Communication is another area which is high in terms of qualifying research and development expenditure. That can be predicted to continue to rise when you consider the advancement in the platforms, processes, and systems that we take for granted and rely on for business to function which may not have even existed as a concept a few years ago.

For industry in the UK there is encouragement from the government and HMRC to stimulate this continued development. The markets can be seen as a global playground with the availability of products being shipped in from other territories, so how can the UK government continue to keep the British business at the forefront of innovation? It is gone unnoticed in some areas that there is business legislation and routes to recover tax expenditure from these activities. If business has expended time, investigation hours, design effort and energy, the Government can pay a portion of the financial expenditure back as a rebate through HMRC. This softens the outlay of any work done to be a stimulus to keep developing.

Looking at a more regional focus, in the last full published financial year, statistics from HMRC show that in Fife alone there were over 160 separate credit awards as rebate against innovation which put approximately £5M back into local businesses to keep innovation moving, and in turn to keep generating business in the area.

It is potentially an unexplored source of revenue back into businesses who are still working on research and development with an estimate that 90% of qualifying businesses have not claimed either through being unaware of the legislation or make a general assumption that they do not qualify.

The available pot for revenue that HMRC can put back into industry for 2022-2025 has been confirmed as £39.8 billion. This has been the largest allowance to be made available for the UK R&D budget. It all goes towards the aim of making the UK a ‘science superpower and innovation nation’. With many small and medium sized innovative companies finding their finances becoming ever more stretched, this could be an untapped revenue stream to keep the wheels of innovation turning.

For more details contact angus on [email protected]