New research suggests engineering companies in the UK are missing out on over £10 billion of R&D funding every year.
The study[1] which was commissioned by MPA for Advanced Engineering 2019, found that one in five (21 per cent) innovation active engineering firms are not taking advantage of the government’s R&D Tax Credit scheme which allows companies to claim back up to 33 pence for every £1 spent on R&D activity.
On average, engineering companies invest £386,000 a year on R&D activity, meaning they are potentially able to claim £100,360 in funding[2].
The study which was commissioned by MPA for Advanced Engineering 2019, found that one in five (21 per cent) innovation active engineering firms are not taking advantage of the government’s R&D Tax Credit scheme which allows companies to claim back up to 33 pence for every £1 spent on R&D activity.
Reasons for not claiming the funding vary, but the most common answer given by engineers is that they don’t believe their companies are eligible (10%).
However, the research revealed that many engineering companies probably qualify without them realising.
Some examples of indicative qualifying activities are, if your company develops new processes to improve efficiency, quality or performance; overcome unplanned technical difficulties or create bespoke solutions for clients.
Two-thirds (67 per cent) of workers think that their firms are ‘innovation active’, which is the most accurate indicator that a company is eligible for the R&D Tax Credit scheme.
Despite this, only a third (37 per cent) say that their companies claim the available funding.
Another barrier blocking engineers from claiming is a lack of awareness about the initiative.
Nearly a quarter (24 per cent) of the surveyed engineers who aren’t claiming admitted that they didn’t even know that the scheme exists.
Even among those who think they are innovation active, one in fourteen (7 per cent) said that they were completely unaware of R&D tax credits.
While many are yet to take advantage of the scheme, engineering companies in the UK are planning on investing heavily in research and development.
MPA are exhibiting at Advanced Engineering 2019 and can be found at stand C14 in the Automotive Engineering section.
Nigel Urquhart, Senior Technical Analyst at MPA, says:
"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.
Office for National Statistics: ‘Engineering Industry in the UK’ (December 2018): www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/adhocs
MPA are exhibiting at Advanced Engineering 2019 and can be found at stand C14 in the Automotive Engineering section.
[1] Survey of 250 UK engineers conducted by The Engineer on behalf of MPA in September 2019
[2] R&D tax credits calculator: https://mpa.co.uk/services/rd-tax-credits/
[3] Office for National Statistics: ‘Engineering Industry in the UK’ (December 2018): www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/adhocs
