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The manufacturing sector has seen tremendous growth and progress thanks to the industrial revolution and innovation brought about by the extensive R&D being conducted at various stages. Whether it is the development of new technology, processes, products, or supply chain improvements, innovation in manufacturing is always aimed at enhancing the performance, yield, and efficiency of the industry. While there are numerous broad and specific areas of innovation within manufacturing, the most significant ones include:

  • Advanced Raw Materials
  • Supply Chain
  • Production Process
  • Management 
  • Technology
  • IT

Innovation within these areas of manufacturing is helping to create smart, data-driven factories and their distribution networks that are much more flexible and receptive to changes and can deliver products and services that surpass customer expectations. Like everything else, the future of manufacturing is also digital. This allows SMEs as well as large businesses to harness the full power of digitisation and automation, to enhance their value proposition and meet the present as well as future demands of the people. 

Benefits of Innovation in Manufacturing

Businesses that conduct R&D in manufacturing stand to gain a lot through innovation. Some of the benefits of R&D and innovation that can help manufacturing businesses succeed and gain a competitive edge are:

  • Adapt and meet changing customer demands quickly
  • Quicker turnaround times and downtime 
  • Reduced reliance on manual operations 
  • Lesser risk of human errors
  • Improved security
  • Improved product quality and yield
  • Efficient relationship management with suppliers and customers
  • Reduced wastage 

R&D Credits for the Manufacturing Industry

The manufacturing industry is one of the largest contributors to the country’s GVA at 11%. It is also the industry that receives the highest R&D spend of about 70%, as well as the maximum R&D Tax Credits than any other industry in the UK. From covering costs for consumables, sub-contractors, other software, and staff costs, R&D Tax Credits can be a valuable source of funding for several purposes. Even though manufacturing companies conduct vital R&D in multiple areas, many of them fail to apply for R&D Tax Credits, assuming their activities are routine and hence, not eligible. However, the scope of R&D in manufacturing is quite extensive and many of these activities are eligible to receive R&D Tax relief. Some examples include:

  • Development and testing of new processing and handling techniques
  • Design and testing of new prototypes 
  • Successful integration of new technology with existing systems
  • Adoption and testing of new materials that provide better quality, efficiency, and environment-friendly
  • Effective scaling up of production processes 
  • Successful integration of automation in the production process
  • Developing ways to reduce wastage

If your business has been conducting R&D within the manufacturing industry, then regardless of which stage of sourcing, production, or distribution it is, it could qualify for R&D Tax Credits and help you receive substantial cashback. Chat with our R&D Tax experts to learn more about what qualifies as R&D in manufacturing and to check your eligibility.