R&D tax incentives are a fantastic way for manufacturers to offset some of the costs of innovation. Yet, many Kiwi manufacturers hesitate to claim because the process can feel overwhelming. So, why does the R&D tax incentive application feel so daunting?

Let’s break down the common challenges manufacturers face and how you can get it right with the proper support.‍‍

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Why Does the R&D Claims Process Feel Daunting?‍‍

The R&D tax incentive process can be confusing for manufacturers—and with good reason.

The application process is complex. From navigating the eligibility criteria to capturing the right technical and financial information relating to your R&D activities, it’s no wonder many manufacturers feel like they’re in over their heads.

To qualify for R&D tax credits, businesses must show that their work is seeking to resolve scientific or technological uncertainties—a concept that may feel foreign to those who don’t see themselves as "high-tech." This confusion often leads to missed opportunities.

"Many manufacturers are innovating every day, whether through product improvements or refining processes. Yet, they’re hesitant to claim because the bureaucratic language and requirements seem too complex to navigate," says Michael Barry, Head of Growth at Swell.‍‍

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Common Challenges for Manufacturers

Even when manufacturers recognise they’re eligible, many hit roadblocks when applying. Here are some of the most common hurdles:

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Tracking Eligible Expenses

One of the biggest challenges is understanding which expenses are eligible for the R&D tax incentive. Manufacturers are often juggling both standard production work and eligible R&D, making it tricky to separate those costs.

Without a system in place, pulling the right data together can feel like a mammoth task when it’s time to submit a claim.

"The challenge for most manufacturers is identifying where regular production stops and R&D begins. It’s easy to overlook the costs tied directly to innovation if they’re not tracked properly," Michael explains.

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Gathering Sufficient Documentation

Documenting R&D activities properly is another stumbling block. Manufacturers often feel overwhelmed by the amount of paperwork needed to meet the requirements for R&D tax credits. "The thought of keeping detailed records—from employee time to material costs—can be off-putting. But without proper documentation, businesses may miss out on significant tax credits," adds Michael.

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Perception of a Time-Consuming Process

Many manufacturers shy away from applying for the R&D tax incentive because they think the process will take too much time. For businesses already running on tight margins and limited resources, the idea of dedicating staff to compile reports, track expenses, and submit claims feels like an added burden.

Manufacturers often feel they don’t have the bandwidth to take on another administrative task, especially when it involves navigating complex processes.‍

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Solutions and Support

Despite these challenges, the R&D tax incentive is well within reach with the right preparation and support. Here are a few practical steps to help you navigate the process:‍

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Plan Ahead and Track Expenses Early

The key to a smooth claims process is to plan ahead. Start by keeping clear records of your R&D activities, including employee time spent on innovation, material costs, and third-party involvement. Put a system in place to track these expenses so they’re easy to distinguish from your regular business costs. By setting up this process early, you’ll avoid the last-minute scramble when it’s time to submit your claim.‍

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Use External Support

The R&D claims process can feel overwhelming, but it doesn’t have to be. Partnering with experts like Swell can take the headache out of the equation. Our team knows how to ensure manufacturers understand the eligibility criteria, track the right expenses, and provide the proper documentation without overloading their staff.

"At Swell, we streamline the process so manufacturers can focus on what they do best—innovating. We handle everything from identifying eligible activities to dealing with Inland Revenue, making it easy for businesses to access the credits they’re entitled to," says Michael Barry.‍

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Maximise the Benefits

The R&D tax incentive isn’t just about short-term savings. Done right, it’s a powerful tool for reinvesting in your business and driving long-term growth. By claiming R&D tax credits, manufacturers can fund new projects, develop better products, and stay competitive in a challenging marketplace.

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Rethinking Your Approach to R&D Claims

The R&D tax incentive process might seem daunting at first, but with the right approach and support, it’s both achievable and incredibly rewarding. By planning, tracking expenses carefully, and working with experts like Swell, manufacturers can unlock significant financial resources to fuel future innovation. Don’t let the complexity hold you back—crack the code and start claiming what your business is entitled to today.