R&D Tax Relief might not seem glamorous, but it is incredibly relevant for businesses in the beauty industry. There’s a huge amount of companies in the UK developing beauty and cosmetic products from new start-ups to big multinational brands. That’s loads of innovation! It’s an industry pretty much driven by the need to produce the best products for consumers and success is dependent on how well a business can continue to innovate. This is mainly by using science to create a human benefit through devices and appliances, creams, make-up, and health supplements.
But surprise, surprise, R&D tax relief isn’t widely known about by SMEs, the businesses who could really benefit from the cash injection most, to take their businesses to the next level.
What projects could qualify as R&D?
Qualifying businesses are often investing in activity like; developing materials, coming up with new formulas, developing fragrances and tools, equipment, or technology.
Here are some examples of research and development projects that have qualified for R&D Tax Relief in the beauty and cosmetics industry:
- Designing & creating new products or processes
- Testing products against UK health and safety regulations and other legislation
- Testing complex formulae for products or mixing new combinations of ingredients
- Improving the quality of products
- Improving the cost efficiency of products
- Developing processes and products to be more energy-efficient and reduce waste
- Developing products without the use of readily available ingredients but still maintaining the same price point and performance characteristics.
- Devising new ways to scale up production whilst retaining product composition and stability
- Developing products to be apportioned out in one state, to then set in another e.g. liquid to solid.
- Developing scientifically innovative ways to overcome project constraints; like the chemical makeup, stability, and overall performance of a product without breaching legislative guidelines.
- Using cutting edge technologies that no one else is using, meaning there is no one else to learn from.
Case study: Developing beauty products
A Beauty Products client, imports products from overseas. They developed the ingredients, colours, fragrances to trial and produce a range of new products. Costs claimed were for chemist’s expertise, materials, and support staff.
Claim size: £15K cash refund from HMRC.
Case study: New Perfume fragrances
A perfume manufacturer invested heavily in the experimentation and development of new fragrances through blending standard fragrances, to develop brand new fragrances.
Claim size: £27,000 cash refund from HMRC.
Case study: Profitability of luxury Spa Products
A manufacturer of luxury spa products completed a project, to increase the profitability of their product range, without compromising the performance characteristics of the product. Costs claimed were for chemist’s expertise, sourcing new ingredients, and support staff.
Claim size: £10K cash refund from HMRC.
Case study: New sensitivity formulae
A producer of sun creams and moisturisers developed a complex formula to improve the performance for sensitive skin by incorporating never before combined ingredients. Costs claimed were for chemist’s expertise, sourcing new ingredients, and support staff.
Claim size: £35K cash refund from HMRC.
For DTX’ers, you can get your hands on a pdf to use with your beauty & cosmetic clients. Just drop us an email and we’ll make sure you get this. If you have a client you’d like to discuss, don’t hesitate to reach out.