R&D Tax Relief in the Chemicals Industry

The chemicals industry creates an immense variety of products that impinge on virtually every aspect of day to day life. Find out if your projects could be eligible for R&D tax credits.

Published/updated:

14 May 2021

Chemical hazard pictograms Toxic focus

Introduced by the UK Government in 2000, the R&D tax relief scheme is designed to encourage innovation and global competitiveness by allowing companies to reclaim some of the money invested in qualifying research and development. R&D tax credits are generally considered to be one of the most attractive tax reliefs available, often resulting in significant cash repayments from HMRC.

What are the benefits?

The benefits of the programme include increased cashflow, which is especially important to innovative, developing companies. It also encourages development of a corporate philosophy that embraces innovation and improvement.

Do you qualify?

A common misconception is that the scheme is just for companies with R&D departments and men in white coats. The fact is that any company that spends money trying to improve a product or service through a technological advance, using qualified staff and appropriate project controls, and where there’s doubt about the project’s success, is likely to be eligible.

R&D in the Chemicals Sector

The chemicals industry creates an immense variety of products that impinge on virtually every aspect of day to day life. While many of the products from the industry, such as detergents, soaps and perfumes, are purchased directly by the consumer, 70% of chemicals manufactured are used make products by other industries including other branches of the chemical industry itself. The industry uses a wide variety of raw materials, from oil and minerals to air. With increasing competition worldwide, innovation remains crucial in finding new ways for the industry to satisfy its increasingly sophisticated, demanding and environmentally-conscious consumers.

There are serious concerns about the potential impact of certain manufactured chemicals on living organisms, and on the natural environment. These concerns include air, land and sea pollution, global warming and climate change. However, only a small proportion of chemical wastes are toxic or hazardous. Most of these, together with materials that resist natural breakdown, are incinerated at
high temperatures.

What are the potential areas of eligibility?

A vast range of activity, which could include:

  • Combining organic, inorganic and biochemical catalysis to decrease energy of activation, increase selectivity, reduce energy usage, by-products and replace toxic organic solvents and reagents.
  • Developing new feedstocks to supplement or replace oil and natural gas.
  • Developing technologies based on biomass to produce chemicals in as an environmentally acceptable way as possible.
  • Establishing new technologies based on nanomaterials
  • Technology Transfer (i.e. transferring methods of manufacture between sites)
  • Purification of products
  • Recycling used products
  • Plant design (chemical engineering) - for scale up of process.
  • Fine chemical manufacture - i.e. manufacture of small custom produced chemicals to be used as raw materials in e.g. pharmaceuticals.

What problems might a company face?

  • Problems caused with variation in raw material quality/ specification/ strength.
  • Reducing carbon dioxide emissions through technological changes.
  • Producing chemicals from renewable sources using green chemistry.
  • Process scale up from bench to plant manufacture.
  • Poor product yield.
  • Development of suitable separation technologies.
  • Conversion of lignin to aromatic compounds.
  • UV degradation coatings (e.g. in paints)

Eligibility Questionnaire

If you can answer 'Yes' to most of these questions then, based on our experience across thousands of clients, it looks like you could have a successful claim:

  • Have you developed new tools, products or services using technology?
  • Have you tried to improve your existing products through technical changes?
  • Have you had to resolve technical problems with any of your products?
  • Have you found more efficient ways to produce your products or services?
  • Have you experimented with new equipment or production techniques?
  • At the start of a project, did you ever think 'I'm not sure of the best way to do this?'
  • Have any of your projects failed for technical reasons?

Why ABGI?

ABGI is a leading international tax incentive and innovation management advisor. We help companies accelerate their innovation activity by identifying and securing appropriate funding in the form of grants, tax incentives or commercial funding.

With 30+ years heritage and 200 experts, we manage +£870million of innovation incentives annually across 19 countries, for some of the world's best known brands.

Whatever innovation funding challenges you face – wherever you’re based – we can help.

Please fill out your information below to get your PDF download.
  • Hidden
  • Hidden