UK engineering firms 'could be missing out on £10 billion R&D funding annually'
30 Oct 2019
New research claims that UK engineering companies are potentially missing out on more than £10 billion in research and development funding every year.
The MPA-commissioned study timed for the Advanced Engineering 2019 show estimates in excess of one in five (21%) ‘innovation active’ engineering firms fail to take advantage of the government R&D tax credit scheme allowing companies to claim back up to 33p for every £1 spent on R&D activity.
UK engineering companies invest an average £386,000 a year on R&D meaning they could claim up to £100,360 in funding. Yet, each year, more than 100,000 potentially eligible firms fail to claim – equivalent to £10.2 billion overall.
Ignorance appears to be the prime reason for this as one in 10 respondents’ explanation for their failure is that they do not believe their companies are eligible (10%).
Examples of qualifying activities are, if a company develops new processes to improve efficiency, quality or performance, or if it overcomes unplanned technical difficulties or creates bespoke solutions for clients.
More than two-thirds (67%) of workers define their firms as innovation active, which the report authors suggest is the most accurate indicator that a company is eligible for the credit scheme. Yet only a third (37%) say that their companies claim the available funding.
And nearly a quarter (24%) of the surveyed engineers who do not claim admitted that they did not realise the scheme existed. Among those who rate themselves innovation active, one in fourteen (7%) said that they were completely unaware of the scheme too.
MPA senior technical analyst Nigel Urquhart, said: “Engineering companies in the UK are respected all over the world for their quality and innovation, but a worryingly low number of them are claiming the R&D funding they are entitled to.
“Our research has highlighted that more work needs to be done to raise awareness of the R&D Tax Credit scheme, as these innovative companies could save themselves hundreds of thousands of pounds. This money could then be reinvested to fund further innovation, which would ensure UK engineering stays at the forefront of the industry.”
Check here to see whether your company is eligible for the R&D Tax Credit scheme
Photo: While companies such as FANUC are adept at funding innovation, many others may be failing to understand the opportunites available