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Blog: Fund staff training with R&D tax credits

The biggest asset of any business is, arguably, its people. They’re often the biggest costs but they’re the one thing you can’t run a business without. So why do training and development often get deprioritised, especially when times get tough?

Well, for many, cost is a fundamental barrier to providing the kind of formal training that some people desire, certain roles need, and your competitors can offer.

So how can you pay for upskilling your people – especially now, when the skills gap is growing and technology is changing job functions and requirements, sometimes beyond all recognition?

Think about using the funds you receive from Research and Development Tax Relief.

Benefits of staff training

Advanced or ongoing training can lead to greater efficiency, productivity, and a better culture. It will be an important selling point when recruiting and can help with retention as staff feel they are growing with the firm.

In a sector like manufacturing, for example, the benefits of training extend even further.

With complex machinery and equipment being utilised, the more competent your employees are, the safer operations will be. And that can be measured – through lower accident rates, machine downtime, and compliance costs.

Moreover, the pace of technological development in manufacturing means that if your staff is not kept at the cutting edge, your business may quickly fall behind. From harnessing automation to green technology to connectivity, a well-trained and forward-thinking workforce can give you a competitive edge.

The cost of staff training

Unfortunately, to get into this position of strength your business will face up-front costs. Even if you know it’s an investment in the future, finding cash in the present can put too much strain on finances.

In 2020, the Government reported that UK employers spent £40.2 billion on staff training, working out at £1,530 per employee.

However, innovative companies in many sectors, especially ones like manufacturing, can get tens of thousands of pounds in relief each year through R&D tax credits.

Using this towards a budget for staff training not only helps solve funding woes, but it is also exactly the kind of thing the Government intended it for – to raise the nation’s productivity.

How can I access R&D tax credits?

R&D tax credits are available to UK limited companies which perform research and development. To qualify you need to be taking a risk in trying to resolve scientific or technological uncertainty, but that could be in new products, services or processes, or through modifying existing ones.

The amount you can claim is based on qualifying expenditure on these activities, with the main costs being staff, consumables.

Most businesses in the UK can receive up to 25p for every pound of expenditure if they are profitable and 33p in the pound if they’re loss-making.

R&D tax credits are claimed retrospectively through the tax return, and you can look back over two accounting periods. This means you can potentially make a double claim to catch up if you have never claimed before.

Find out more

Figures for R&D tax credit claims published in 2021 showed that the average manufacturing claim was worth more than £48K, and, if you’re already claiming, we’re offering to benchmark your claim for free to see how you match up.

If you’d like to find out more about this powerful tax break for your business and how it may help you access talent, new skills, and capability, speak to one of our advisors today.

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