The UK Aerospace industry is the world’s second-largest, with a turnover of £22.4bn in 2021. The aerospace industry is full of complexities, challenges and competition and has great potential for research and development. The UK government recognises Aerospace and aviation as vital industries in the UK, given their technological advancements and development more than other sectors and their contribution to the economy. The majority of projects in aviation can be qualified as R and D for R&D tax credits claim, providing additional funding to the aviation companies. This blog explicates R&D tax credits for Aviation and aerospace sector.
R&D tax credits for Aerospace & Aviation
R&D tax credits offer financial support to companies progressing their way with research and development to boost innovation in the UK. This scheme was initiated in the year 2000 to incentivise companies to invest more in scientific and technical projects to improve the UK’s economy. Every year companies from all sectors claim R&D tax credits and relief against their qualifying R and D expenditure. Sectors commonly claiming R and D incentives include:
- Manufacture
- Architecture
- Food & Beverages
- Agriculture
- Aviation & Aerospace
- Information & Communication
- Pharma
- Software and IT
- Data Sciences
- Construction
R&D tax credits are a generous scheme not limited to any specific sector, and it offers financial support to any company investing in innovation. R and D occur during every step of aerospace design, manufacturing, assembly, and testing. Therefore the UK government offers incentives to the UK aviation and aerospace companies to strengthen development in the sector. Research and development projects are often very time-consuming and costly and require help from professionals to resolve uncertainties with no instant results. Aerospace and Aviation also involve such complexities, and additional funding can help companies in the sector to move their projects forward. R&D tax credits can be highly lucrative in streamlining cash flow and making the companies run smoothly with cash credits or tax relief.
Do You Qualify for the R&D Tax Credits Claim?
Companies miss out on R&D incentives due to their unawareness of eligibility. HMRC provides a very simple definition of what qualifies as R&D and what does not. If your company is undertaking any activity with the intention to achieve scientific or technical advancement by creating some solution that wasn’t readily available, your project will most likely qualify as R&D. These claims are available to any company regardless of their sector or the success of the project, even if your R&D project failed, you can still claim for it.
To be clear about your eligibility for the claim, the best and easiest way is to consult an R&D tax credits specialist. R&D tax credits schemes are ever-evolving every year, regulations change, and new amendments are introduced. Therefore, to save yourself from any trouble of enquiry, it is advised to consult a specialist before tailoring a claim.
What is Considered R&D in Aerospace & Aviation?
Aviation and Aerospace involve various qualifying activities, from developing lightweight materials to the innovation of advanced systems. Some examples from Aerospace and Aviation that qualify for R&D tax credits claim are:
- Research and design for aviation systems
- Manufacturing of components for aerospace systems
- Creation of secondary procedures
- Creation of prototypes for performance analysis
- Qualify checks and controls for new components
- Software development to automate tasks such as manufacturing components
- Creation of a synthetic environment
- Ground trials and testing of new equipment
- Creating components at lower costs or increased efficiency
- Reliability assessments
- Cloud-based integrations
- Digital model verifications
- Air traffic management trials
- Creation of advanced systems using AI
- Advancements in complex sensors
- Enhancing innovative contingency management capabilities
- Using model-based systems engineering (MBSE) in a creative way
In this fast-evolving and competitive industry, you must ensure your company is rewarded for every investment made in research and development projects. To be confident that your every qualifying cost is rewarded, contact our R and Tax Credits specialists. We understand your sector and speak your jargon to help you understand R&D claims in your language. With our experience in tailoring R&D tax credits claims, we can help you discover qualifying R&D activities and expenditures in your projects and R&D claims for you.
Many Aerospace and Aviation companies miss out on qualifying aspects of their projects; that’s where we help them realise their potential and assist them in getting the reward they deserve. We use a sector-specific approach to create an R&D tax credit claim that is fully maximised and compliant to withstand scrutiny by HMRC.