Tax savings for planet savers

Caroline Milton - Menzies Accountant

Caroline Milton – Partner and Manufacturing Specialist

Whether it’s plastic straws, carrier bags or coffee cups, in recent years there has been a revolution in the way that people engage with products, with a focus on environmental sustainability.

Recognising the environmental responsibility

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Many consumers are seeking out environmentally sustainable and energy efficient products. At the same time, many businesses are recognising their responsibility to help the planet. Companies that work to solve the problems of pollution and waste, through the development of sustainable products, may find themselves eligible for valuable tax relief. 

The examples of businesses who are successfully focusing on the environment are numerous, with many industries successfully responding to this shift in demand. For example, buyers now request offices and homes to be designed and built with a focus on harnessing renewable solar energy to support heating the building.

The focus on the environment has also been driven by businesses themselves, with many manufacturers analysing their own production processes to ensure waste is minimised.

Companies have focused on solutions which use precious resources such as energy and water in the most efficient way, often using technology to improve processes, whilst continuing to meet quality and regulatory standards. For example, reducing the amount of water used in production helps to manage costs whilst also putting the business on a sensible sustainable footing. To implement such a solution takes time to test and improve the new technology, and this time and expense can form the basis of a claim for Research and Development (‘R&D’) tax relief.

How can I access R&D tax relief?

R&D tax relief is available for businesses who endeavour to solve environmental and sustainability problems. In many examples HMRC have accepted that making a process more environmentally friendly is a ‘scientific or technological improvement’, and therefore the development costs are ‘qualifying expenditure’ for the purposes of R&D. Menzies have a wide variety of clients who have been successful in adapting their products and processes to be more sustainable and efficient, and supported them with a corresponding claim for R&D tax relief.

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