Aerospace & Defence R&D Tax Credits
We can support your company throughout the entire lifecycle of an Innovation project, from IP Management and Grant Funding, to R&D Tax Relief and Patent Box.
We can support your company throughout the entire lifecycle of an Innovation project, from IP Management and Grant Funding, to R&D Tax Relief and Patent Box.
There are many strategies available to AD&S companies to fund and monetise innovation: Intellectual Property (IP) management is crucial for protecting inventions, designs, and technologies through patents, trademarks, and copyrights, enabling licensing and commercialisation for revenue generation.
Exploring grant funding opportunities from government bodies and private organisations can provide support for research and development initiatives. R&D tax relief schemes offer tax incentives, reducing the financial burden of innovation investments.
Finally, the Patent Box regime provides a reduced tax rate on profits from patented inventions, incentivising companies to develop and commercialise patented technologies.
Intellectual Property (IP) protection not only safeguards the innovators’ rights but also provides a platform for licensing and commercialisation, enabling revenue generation.
Grant funding is a significant source of finance for the Aerospace & Defence industry, effectively reducing the economic risks linked to the research & development of new cutting-edge technology.
Tax incentives for companies investing in innovation, reducing the financial burden associated with research and development activities.
In recent years, intangibles (including intellectual property such as design rights, industrial secrets, trademarks and patents) have played an increasing part in company valuation.
In 2020 intangibles were estimated to represent 70% of global company value. A study by the European Patent Office in 2021 also showed that companies which own at least one patent, registered design or trademark generate on average 20% higher revenue/employee than those without any IP rights.
Given this backdrop, it’s important that management teams in aerospace and defence sectors are aware of the IP within their business and they have a plan to effectively exploit this
Threats:
Opportunities:
With recent reports that four of the top five recipients receiving the most funding from the UK Government’s innovation agency (Innovate UK) are in the aerospace industry, and the recent announcement of a £273 million investment to improve aerospace innovation technologies, the UK government is keen to encourage further investment in innovation in the aerospace industry.
As a result, there are plenty of grant funding options available to help AD&S companies innovate and stay competitive
European Innovation Council: Grants up to €2.5million for consortia of three or more with at least 2 members for EU states. Although there is a specific challenge for “space industries” other applications can be submitted through the “open call” stream which runs four times each year.
Defence & Security Accelerator: 100% grants up to £130,000 for the development of new technologies which may have defence or security applications.
NATEP: Grants for collaborative development of technologies with aerospace applications, consortia should include one potential end-user or customer.
DTEP: Grants for collaborative development of technologies with Defence applications
STEP: Grants for collaborative development of technologies with Space applications
Innovate UK Innovation Loans: Loans up to £2.0 million to support later stages of research & development. Each round of funding is focussed on specific technology themes. With flexible repayment terms and competitive interest rates.
DASA Defence Innovation Loans: Loans up to £1.6million for development and commercialisation of technology/products with defence applications. Again flexible terms and competitive interest rates.
1. Grant Sourcing:We review all available sources to find the grant that is right for you, rather than opting for the most obvious one: Innovate UK, NATEP/DTEP/STEP/DASA and Horizon Europe/ European Innovation Council.
We look at all available forms of innovation support – other than grants:
2. Proposal writing & pitch preparation
R&D tax relief schemes offer tax incentives for companies investing in innovation, reducing the financial burden associated with research and development activities.
You could receive tax credits or tax deductions for your research and development expenditures. This helps reduce the financial burden of innovation and could allow you to reinvest the saved funds into further R&D initiatives, further accelerating innovation within your business and propelling the aerospace, defence and space sectors forward.
The benefits extend beyond immediate cost savings, as the R&D tax relief promotes growth, drives competitiveness, and fosters a culture of continuous improvement within the industry.
Examples of qualifying activity for R&D tax relief in aerospace and defence:
Development of advanced propulsion systems: designing and improving innovative propulsion technologies for use with sustainable sources of fuel (SAF, Hydrogen and electric), as well as engines with enhanced fuel efficiency or reduced emissions.
Materials research: Projects involving the development of new lightweight and high-strength materials for use in aircraft and defence equipment, such as composites or alloys with superior properties.
Unmanned Aerial Vehicles (UAVs) and autonomous systems: Research and development activities aimed at enhancing the capabilities of UAVs and autonomous systems, including navigation, control systems, and integration of advanced sensors.
Military equipment enhancements: Projects focused on improving the performance, durability, or efficiency of military equipment, such as armoured vehicles, communications systems, or weaponry.
Space technology advancements: Research and development initiatives related to space exploration, satellite technologies, and satellite communication systems, including the development of new satellite components, launch vehicles, or space exploration instruments.
We help companies navigate the complexities of applying for innovation funding, ensuring that businesses already benefitting maximise their entitlement, as well as enabling those encountering the process for the first time to achieve a smooth route through it. We also manage the impact of grant funding and subsidies on R&D tax benefits.
Our Innovation Funding Consultants – highly professional post-graduate qualified scientists and engineers with experience in the aerospace and defence sectors – will gather all the information they need quickly and efficiently, peer-to-peer with your team. We write the Technical Report, collate all the eligible costs and calculate the associated benefit for inclusion in your company tax return. Lastly, we take care of any queries from the relevant tax authority as enquiry defence is included free-of-charge with every claim we submit.
Visit our R&D Tax Credits page to find out more.