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 small, 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 renewable energy sector
There are numerous sources of renewable energies such as solar, wind, ocean, biomass, and hydrogen. Many businesses associated with the field of production of these energies push technological boundaries on a daily basis. Whether it's prototyping, development or experimentation with materials or physical production processes, there's a wide variety of disciplines involved in advancing the science responsible for energy production, all of which could qualify for substantial tax rebates.
There are many examples of incredible advances in the field of renewable energies, spearheaded by innovative businesses making successful R&D tax relief claims. This included companies which were able to safely enhance the yield of their wind turbines as well as those which advanced the design of their rotor blades to improve reliability, structural resistance, aerodynamic properties and noise-related performance.
Other innovative companies were able to enhance the yield of their solar panels, decrease losses in regulators and converters, improve the performance of bifacial solar panels, increased the efficiency of monitoring tools and better manager storage technologies, such as battery packs, for off-grid applications.
There are numerous examples of advances in the field of marine energy as well, including companies working on improving the maximum achievable output, increasing the reliability of instrumentation for use in high energy environments, as well as developing efficient energy storage devices at remote, offshore, renewable energy sites in extreme climates.
What are the potential areas of eligibility?
A vast range of activity in the area of renewable energy, which could include:
- Increasing energy efficiency and the achievable yield or output.
- Developing systems built to last longer (i.e., improved resistance to extreme weather conditions and corrosion).
- Improving energy storage technology & energy transport technology.
- Developing clean biomass energy plants.
- Improving the reliability and decreasing the negative impact of electrical connections and wiring in solar panel systems.
- Developing green production technologies and processes (e.g., the production of green NH3).
What problems might a company face?
- Maintaining structural resistance and integrity while increasing efficiency. Renewable energy power plants are often in areas with extreme weather conditions which can reduce the output or cause damage to the structures.
- Many wave and tidal energy systems are located in remote areas, which can prevent exporting of power above certain limits.
- When developing systems to maximise energy efficiency, challenges such as a minor drag force exerted by cabling, or electrical wiring casting a shadow (in the case of solar panels) can have an important negative impact on output.
- Managing and monitoring the varying energy loads from renewable sources.
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 tool, 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 your 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?
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.