Engineering businesses are often solving complex technical problems around performance, efficiency, safety, materials, manufacturing, automation, testing and systems integration. Where your company is developing new products, improving processes, building prototypes or overcoming uncertainty in how a system, component or process performs, you may be carrying out qualifying R&D. InnoFund helps engineering companies identify eligible activity, prepare compliant R&D Tax Credit claims and protect future innovation funding opportunities.
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Engineering innovation can take place across product design, prototyping, process development, materials, manufacturing, software, automation, energy efficiency, safety, scale-up and complex systems integration. Qualifying R&D may arise where a business is not simply applying known engineering methods, but is developing or adapting technology because the outcome cannot be readily predicted by competent professionals in the field.
This includes work across:
Engineering R&D is often found in the practical detail of testing, iteration, tolerances, performance limits and systems behaviour, especially where known methods do not deliver the required outcome.
Head Of Compliance & Tax Disputes
A note from Simba Mareverwa
Engineering claims can be strong, but they must be built around the right evidence. A project may involve a new product, improved process, better component or more efficient system, but HMRC will want to understand the specific technical uncertainty that had to be resolved.
That uncertainty may sit in performance, durability, tolerances, materials, system behaviour, manufacturability, automation, software integration, safety, energy use, reliability or scale-up. A compliant claim needs to explain what the business was trying to advance, why existing engineering knowledge was not enough, and what testing, design iteration or development work was carried out.
Simba Mareverwa, InnoFund's Head of Compliance and Tax Disputes, helps ensure engineering R&D claims are reviewed with compliance at the centre. His focus is making sure claims are not built around broad claims of innovation or project complexity, but around clear technical evidence, eligible activity, competent professional input and defensible methodology.
Qualifying R&D
Engineering companies may qualify for R&D Tax Credits where they are seeking an advance in science or technology and have to overcome technical uncertainty. Qualifying activity can arise across product development, prototyping, materials, manufacturing, control systems, automation, software, testing, energy efficiency and systems integration.
R&D may arise where an engineering company is designing, developing or prototyping a new product, component, machine or system with improved performance, functionality, reliability or efficiency. The qualifying work sits in the technical uncertainty around how to achieve the required outcome, not simply in producing a new commercial product.
Engineering businesses may qualify where they are developing new or improved processes to increase efficiency, reduce waste, improve quality, lower cost or solve production constraints. This could include work on tooling, automation, workflow, tolerances, repeatability, process control or manufacturing defects.
Materials innovation can involve qualifying R&D where a company is developing, selecting or adapting materials to improve strength, durability, weight, resistance, conductivity, flexibility or cost-efficiency. The work may involve testing alternative materials, composites, coatings or treatments where the performance outcome is uncertain.
Engineering R&D often includes the development of software, algorithms, control systems, robotics or automation tools. Projects may qualify where the business is creating or adapting systems to improve precision, speed, monitoring, safety, interoperability or process efficiency beyond standard configuration.
R&D may arise where a business is developing systems, products or processes that reduce energy consumption, emissions, material waste or environmental impact. The project must involve technical uncertainty, such as testing new designs, processes or technology combinations to achieve the required performance.
Engineering projects may qualify where a company is scaling up prototypes, testing performance, validating designs or integrating complex systems. Technical uncertainty can arise when a solution works at small scale but behaves differently in production, real-world use or when connected with other systems.
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Non-Qualifying Work
Not every engineering project, prototype or process improvement will qualify for R&D Tax Credits. The key question is whether the business faced scientific or technological uncertainty and carried out systematic work to resolve it.
Examples of work that may not qualify include:
Engineering projects often contain a mixture of qualifying and non-qualifying activity. InnoFund helps separate routine engineering from genuine R&D so the claim is accurate, compliant and defensible.
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Engineering businesses may be able to claim relief on qualifying costs linked to eligible R&D projects, including:
The treatment of prototype materials, trial production, subcontracted work, client-funded projects, software and externally provided workers can be particularly important in engineering R&D claims.
InnoFund helps identify which costs are eligible and ensures the claim is built around the qualifying technical work, not just the wider commercial project.
HMRC is applying greater scrutiny to R&D Tax Credit claims, including claims from engineering and manufacturing businesses. A strong claim must explain the technical uncertainty clearly and show why the work went beyond routine engineering or commercial product development.
Common risk areas include:
InnoFund helps engineering companies prepare claims that are clear, compliant and evidence-led. We focus on the technical work behind the project, the uncertainty faced, the process followed and the costs directly connected to qualifying activity.
Yes. Engineering companies can claim R&D Tax Credits where they are seeking an advance in science or technology and have to overcome technical uncertainty. This may include work involving product development, prototyping, materials, manufacturing processes, control systems, automation, software, testing, energy efficiency or systems integration.
Product development may qualify where the business is trying to solve a technical problem and the solution is not readily available. Simply designing a new product for the market is not enough, but developing a product with uncertain performance, durability, efficiency, safety or manufacturability may be eligible.
Yes. Prototypes can support an R&D claim where they are used to test or resolve technical uncertainty. The prototype does not need to become a successful final product, but the work should form part of a systematic process of investigation, testing and development.
Yes. Process improvement can qualify where the company is developing a new or improved engineering or manufacturing process and faces technical uncertainty. Examples may include improving repeatability, reducing waste, increasing efficiency, solving production defects or integrating automation.
Possibly, but this depends on the contract, funding position and scheme rules. Engineering projects often involve client-funded work, subcontractors and supply-chain development, so the contractual position should be reviewed carefully before deciding who can claim.
Useful evidence may include technical drawings, CAD models, test results, prototype records, design reviews, calculations, production trial data, software logs, risk assessments, materials analysis, photographs, meeting notes and explanations from the competent professionals involved.
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Why Us
Got a project you want to discuss? InnoFund helps separate routine delivery from genuine R&D so that claims are accurate, compliant and properly evidenced. Speak to our innovation funding experts today.
or call 020 4583 1267
