R&D Tax Credits could give manufacturing in Ireland a much-needed financial boost. But, unfortunately, a lot of the R&D work within the sector goes unrecognised and the potential benefit is being left unclaimed.
The government’s R&D incentive lets you claim up to 30% of what you spend on qualifying R&D (increasing to 35% for 2026). This means you can recover costs on things like staff, materials, and machinery.
To encourage such R&D spending, the UK Government offers tax relief through R&D Tax Credits. For accounting periods beginning on or after 1 April 2024, most companies (large and small) will access this support through the merged R&D expenditure credit. This provides an above the line expenditure credit based on what has been spent on certain eligible R&D activities.
Revenue’s last report showed that manufacturers receive 66.6% of the R&D relief the government pays out, even though they only make up 25.6% of total claims. It’s a reflection of just how valuable the scheme can be for manufacturers who invest in innovation.
But manufacturers in Ireland aren’t using the R&D Tax Credit scheme nearly enough. In 2023 just 462 manufacturing companies used the scheme. For the same year, the Central Statistics Office counted 5,589 enterprises that were responsible for industrial production in Ireland. That means over five thousand manufacturers haven’t used the scheme.
We believe there’s a huge mismatch between the number of R&D relief claimants and how much manufacturers actually innovate. Much of the R&D stays “hidden” from manufacturers themselves. This is because improving processes or delivering advanced technical solutions to clients’ briefs is so ingrained in what they do. In reality, they may not realise that, when they’re solving complex problems, their work is eligible for financial relief.
When does problem-solving cross into R&D?
As a manufacturing business, you face challenges every day to fulfil your orders, meet your customers’ timelines, deliver within the specifications, all at the agreed price point.
Day-to-day R&D activities often start as firefighting or using your initiative to fix an issue without an instruction manual. You might experiment at your site because you want to “pack more bags per minute” or create more sustainable ways to produce goods.
The R&D part of this work often goes unclaimed because businesses see it as “just part of the job”. But when you engage in problem-solving you’re often going well beyond just using methodologies like Lean or Six Sigma. You are creating process innovations that go beyond the baseline technology in your environment.
For larger challenges that need solving, maybe you gather a project team, bring in engineers or the maintenance manager to build state-of-the-art solutions using insights from operations and product specialists. The point is that your team is innovating. They’re systematically testing and learning to solve problems that require genuine scientific or technical advancement, which is exactly what R&D Tax Credits exist to support.
Even failed R&D is still R&D
Not every project can be successful. For whatever reason, the technical challenges involved in building new capabilities to “pack more bags per minute “or “move steps from manual to automatic” may just be too great, or at least commercially unviable. But when an R&D project fails, it can still sow the seeds for moving beyond current practices.
Projects that stall or products that fail still involve experiments and trials. If you fail completely, it proves that the problem was hard to solve. It took time and effort, and you gained knowledge. You might go back to it later with a new plan and the cash in your pocket to pay for the necessary staff, equipment, or materials.
These failed R&D projects are still eligible for tax credits. In fact, tax credits help to de-risk projects to encourage businesses to experiment knowing that failure is possible.
How Leyton can help
Leyton specialises in uncovering hidden innovations, helping businesses claim the value they’ve already created. We don’t create the innovation; we help you recognise, structure, and fund the work that already exists in your business.
Our team acts as innovation translators. We speak the same language as your maintenance engineers and operations managers, sitting between your technical teams and finance to make sure your work is properly recognised. As your funding partner, we help you get cash back into the business to take the next step in your R&D journey.
Curious to see if there’s any hidden R&D within your business? Let’s talk.
Case study example: How we helped EliteForm Manufacturing
EliteForm are leading steel manufacturers, who use research-driven and design-centric process to deliver cutting-edge solutions for their customers.
Before they worked with us, they’d only been able to claim a small amount of R&D relief through their accountant. We helped them claim the full amount of government funding available, which was invested back into R&D while also helping their company to grow..
