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UK construction companies are increasing their investment in innovation

UK construction companies are increasing their investment in innovation, with research and development (R&D) expenditure rising by £70 million, according to new figures released by HMRC.

Analysis by IronmongeryDirect revealed that in the first part of 2018/19, construction firms spent £1.36 billion on qualifying projects. Even though many claims have yet to be submitted for that financial year, this is already 5.4% more than the whole of 2017/18 (£1.29 billion).

Using the government’s R&D Tax Credit Scheme, companies can claim back up to 33p for every pound spent on R&D activity. This includes any project that aims to advance the industry by researching or developing a new process, product or service, or improving an existing one.

For such work completed during 2018/19, construction companies have already claimed £235 million of Corporation Tax relief.

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More companies in the sector are starting to take advantage of the scheme, as the latest data shows overall number of claims is also on the rise. So far, construction businesses have made 3,340 claims for R&D funding, which is a year-on-year increase of 1.8% (60). The industry now represents 5.7% of all R&D claims in the UK.

The majority of the construction-related R&D projects are classed as ‘specialised construction activities’. These account for two-thirds (66%) of the sector’s claims, way ahead of ‘construction of buildings’ in second place (21%).

However, the most valuable construction R&D claims are those labelled as ‘civil engineering’. Across the whole industry, the average R&D claim in 2018/19 was worth £70,359 – almost 5% higher (£3,286) than the year before (£67,073) – but the figure is far greater for civil engineering projects. The typical amount of tax relief awarded to such work is £129,412.

The totals also vary significantly across the UK. The most innovative area is London, with more claims made in the capital than any other part of the nation (455).

But it is Northern Ireland where construction represents the greatest percentage of a region’s total R&D claims. More than one in ten (11%) of the country’s qualifying projects fall within the industry (180/1,605).

Learn all about how our R&D Tax Claims work.

Despite only making the fourth highest number of claims, construction firms in the North-West of England are investing the most money in innovation. Its businesses have already registered £145 million of R&D spend for 2018/19 – more than any other area.

The regions which have made the most and least claims for construction R&D funding for 2018/19, so far, are:

  1. London – 455 claims (£55m)  
  2. South East – 425 (£85m)  
  3. East of England – 400 (£5m)  
  4. North West – 375 (£145m)  
  5. West Midlands – 295 (£10m)  
  6. Yorkshire and the Humber – 255 (£85m)  
  7. South West – 250 (£10m)  
  8. East Midlands – 215 (£10m)  
  9. Northern Ireland – 180 (<£5m)  
  10. North East – 165 (£40m)  
  11. Scotland – 165 (£10m)  
  12. Wales – 155 (<£5m)  

Dominick Sandford, Director and Head of Merchandising & Marketing at IronmongeryDirect, said: “It’s encouraging to see that so many UK construction companies are taking advantage of the R&D Tax Credit scheme. Our businesses are world-leaders for innovation and the HMRC initiative is designed to reward them for their pioneering work.  

“The tax relief can provide a welcome boost for construction firms and any money saved can even be reinvested to finance further research.”  

By Jonathan Symcox

Source: Business Cloud

To find out more about how we can assist you with your R&D Tax Reclaims please click here

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Current funding opportunities for businesses from Innovate UK

Innovate UK has published a list of its current funding opportunities for businesses and researchers. Please check individual competition dates as they may have been extended.

Innovation loans: April 2021 open competition

Businesses can apply for loans for innovative projects with strong commercial potential to significantly improve the UK economy.

Innovate UK SMART grants May 2021

UK-registered organisations can apply for a share of up to £25 million for game-changing and commercially viable research and development innovation that can significantly impact the UK economy.

Discover our R&D Tax Reclaim services.

ISCF smart sustainable plastic packaging: business-led research and development

UK-registered businesses can apply for a share of up to £7 million for research and development projects with the potential to significantly impact the 2025 UK Plastic Pact targets.

Creative Industries Fund: fast start business growth pilot

UK-registered micro and small businesses in the creative sector can apply for a package of support to grow their business. This package includes ongoing support from Innovate UK EDGE and funding of up to £25,000 for innovation projects.

Young Innovators Awards 2021/22 (Competition opens: Monday 14 June 2021)

Young people can apply for an award to make their business idea a reality, which includes a grant for £5,000, a living allowance, and tailored business support.

Biomedical catalyst 2021: early and late-stage awards

UK registered organisations can apply for a share of up to £18 million to develop innovative healthcare products, technologies and processes.

Learn all about how our R&D Tax Claims work.

Addressing limitations in manufacturing nucleic acid therapeutics

Apply for funding to set up a research consortium addressing challenges in the manufacture of nucleic acid therapeutics.

Innovation in time dissemination and application

UK registered organisations can apply for support for business-led innovation in resilient time, frequency and synchronisation.

Hydrogen transport hub: demonstration

UK registered businesses can apply for a share of £2.5 million. This is to demonstrate how green hydrogen can be used to power transport solutions for end users.

Expression of interest: Automotive Transformation Fund round 11

UK registered businesses can apply for a share of up to £1 billion for capital-centric investment projects. The project must help industrialise the electrified automotive supply chain at scale in the UK.

Driving the electric revolution: supply chains for net zero

UK registered businesses can apply for funding to research supply chain development for power electronics, electric machines and drives.

Knowledge transfer partnerships: 2021 to 2022, round two

UK registered academic institutions, research and technology organisations (RTOs) or Catapults can apply for a share of up to £6 million to fund innovation projects with businesses or not-for-profits.

SBRI funded competitions

SBRI supports a range of competitions with public sector organisations and departments. Find out more about SBRI: the Small Business Research Initiative.

Latest SBRI competitions:

SBRI: Fusion industry challenges

Organisations can apply for a share of £2 million, inclusive of VAT, to develop solutions that accelerate fusion power plant design and reduce their fuel requirements.

Source: Cambridge Network

To find out more about how we can assist you with your R&D Tax Reclaims please click here