R&D Tax Relief For Aerospace Companies

UK aerospace manufacturers can recoup up to 33% of their research and development costs through R&D Tax Relief, a generous scheme that rewards companies for investing in innovation. Here’s what you need to know about R&D Tax Relief, including who is eligible, which costs qualify for relief, and how GrantTree’s experts can help you make the most of this valuable scheme.

R&D Tax Relief Aerospace


From the earliest biplanes to supersonic jets and treatment-carrying drones, the UK’s aerospace industry has a long, celebrated history of unleashing cutting-edge technologies that enable faster, safer, cleaner air travel. 

The challenges in achieving these advances in aerodynamics, software, propulsion and material science are varied and complex. To overcome them, innovating companies are required to invest large sums in design, testing, refinement, and production. 

Helpfully, many of these investments are eligible for R&D Tax Relief, a generous government subsidy that allows businesses investing in innovation to recoup up to 33% of their costs in cash credits and corporation tax reductions. 

What is R&D Tax Relief?​

R&D Tax Relief – also called R&D Tax Credits – is a government scheme designed to reward and de-risk innovation by allowing companies to recoup a percentage of their R&D expenditure. 

In the 2021 tax year, the R&D Tax Relief programme distributed £6.6 billion in cash credits and tax reductions to nearly 90,000 businesses. This windfall helped them to conduct more development work, accelerate key hires, and achieve ambitious growth targets.

R&D Tax Relief supports companies looking to overcome scientific and technological obstacles. As a result, the scheme is perfectly suited to companies working in aerospace, a field rife with challenges and unknowns. 

R&D Tax Relief is available to a wide range of companies in the aerospace industry, from multinational manufacturers to earlier-stage businesses producing components used in a larger vehicle or system.

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Which aerospace projects qualify for R&D Tax relief?

Aerospace unites a range of technological fields, from rocketry to navigation, cloud computing to AI. As a result, a wide range of aerospace-related activities qualify for R&D Tax Relief. Here are a few examples.

Which costs are eligible for R&D Tax Relief?

In total, ten types of development-related costs are eligible for R&D Tax Relief. You can read the full list here in our dedicated blogHere are some examples of claimable costs that are specific to the research and development activity conducted by aerospace companies.

Staff Costs

Salaries, wages, pension contributions, and national insurance contributions for staff directly involved in your R&D, including:

  • Aerodynamists 
  • Aerospace, Chemical, Mechanical and Systems Engineers 
  • CAD Designers
  • Composite Technicians
  • IT Architects
  • Maintenance Technicians
  • Materials scientists
  • Project Managers
  • Quality Control Managers and Inspectors
  • Software Developers 
  • Test Pilots


Certain costs associated with the design and construction of a prototype needed to test the R&D you’re undertaking are eligible for relief. However, if you are planning to sell your prototype, HMRC will classify it as a first-of-class product, and you will only be able to claim relief on costs associated with work to overcome a scientific or technological uncertainty.


Consumables are resources that are ‘used up’ in the R&D process. This includes parts, raw materials, chemicals like solvents and lubricants, fuel, gases and certain utilities including water, light and heating. Utilities are usually apportioned based on how much of the cost is attributable to R&D and not routine aspects of the business.

Aerospace subcontractors and R&D Tax Relief

In the aerospace industry, it’s common for larger manufacturers to commission smaller companies to develop products and solutions that will form part of bigger vehicles and systems. 

Oftentimes, the subcontractor will supply their customer on a per-unit basis. Under this arrangement, the subcontractor will be barring the financial and technical risk of the R&D and, therefore, may be eligible to claim R&D Tax Relief. 

The laws governing relief for subcontractors are fairly complicated. If you have been subcontracted by a larger aerospace company and want to understand whether you’re eligible for R&D Tax Relief, our experts would be happy to help you. Just get in touch.

Free Guide: R&D Tax Relief for Aerospace Companies

R&D Tax Relief is a valuable and relatively-accessible source of funding for aerospace companies. However, the scheme is also filled with grey areas and nuances, which can easily land an eligible company with a lengthy enquiry.

To help you navigate these potential pitfalls, GrantTree’s R&D Tax specialists have written this detailed guide to building a compliant claim. Download your free copy below.

Aerospace_RDTC Guide_Front Page

Looking for help? GrantTree is here for you.

The R&D Tax Relief scheme has changed dramatically over the last two years. The amount of relief available has fluctuated, the list of eligible costs has grown, and the claims process is about to become significantly more demanding.

If you want to make the most of these changes while protecting your aerospace company from a damaging, time-consuming HMRC enquiry, GrantTree’s R&D Tax Relief experts are here for you. 

We have helped more than 2000 companies access over £350 million in R&D Tax Relief over the last 12 years, including many involved in developing vehicles and systems in the aerospace sector. 

Combining leading, sector-specific technical expertise with decades of cumulative tax experience, our R&D Tax Relief teams will ensure you access your full legal entitlement of relief while saving you hours of effort.

Case Study: PPSGB

Read how GrantTree helped Milton Keynes-based manufacturer PPSGB secure more than £160,000 in R&D Tax Relief

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