The Catalyst for Success: Tax Reliefs for Chemical Businesses

May 31, 2024

The UK chemical business sector is a critical element to the UK economy. It contributes over £30 billion in annual value add to the UK economy and employs over 153,000 people across the England, Scotland and Wales.

This highly competitive and fast-moving sector is home to much more innovation that people on the outside might think.

Whether working with fine chemicals, speciality chemicals, polymers, composites or green chemistry, there are lucrative tax reliefs available that can help support businesses to continue with their ground-breaking work.


R&D in Chemical Manufacturing

Chemical manufacturing is substantially research-intensive in comparison to other industrial sectors. In fact, more than 20% of the UK’s total R&D spend comes from the chemical industry (

Chemistry holds the key to tackling many of the world’s challenges, along with providing key ingredients that we all use in our everyday lives for washing, cleaning, fuel, pharmaceuticals, and cosmetics.

All this work involves intensive research, studies, trials and testing, before new products can be introduced to the market.

For tax purposes, R&D can be defined as ‘activities that involve taking a risk whilst attempting to resolve uncertainty’. There are, of course, detailed lists of qualifying specifics, but much of the chemical research and development work undertaken in chemical factories, labs, offices and warehouses can be included within an R&D tax claim. This helps companies to claim some of their expenditure back from HMRC in the form of reduced or repaid tax. This cash injection can help fund the next big project or idea.

Some examples of qualifying activities could include:

  • Developing new materials for use in manufacturing
  • Designing innovative coatings
  • Experimenting with chemical structures
  • Addressing technical issues during chemical production
  • Developing new pesticides
  • Developing new recycling materials
  • Developing new materials for use in space or radioactive spaces
  • Improving existing chemical products


Are you Innovating in the Chemical Industry?

There is a continuous scope for innovation that could qualify for a sizable R&D tax credit claim.

Bonham & Brook are proud member of the Chemical Business Association. We enjoy working with some of the brightest minds in the chemical industry to help them reach the benefits they are entitled to and maximise on the size of their tax claim.

Whether you are new to making a claim or are keen to outsource the onerous task to a specialist, we are happy to discuss your needs and find a suitable way forward.


Energy Relief Claims for Chemical Manufacturers

The chemical sector is one of the UK’s highest users of energy. Due to the nature of converting raw materials, high heating processes, machinery and haulage – the use of gas, fuel and electricity is unavoidably high. Whilst a growing number of businesses are utilising green energy where they can, most are heavily reliant on energy and the cost of running chemical manufacturing businesses is therefore immense.

Chemical labs, plants and offices are typically very large premises, employing hundreds or even thousands of workers. Most plants are operating 24/7 throughout the year, so are costly to run. These combined factors make the sector a heavy consumer of energy, using an estimated 40,800,000 MWh per year.

Securing a good rate with energy providers is key. But there are some additional ways that chemical businesses can reduce their outgoings, aside from the work your energy broker will provide. These are incorporated taxes contained within your kWh. For certain industries we can reduce or completely remove qualifying costs, without effecting any contractual agreement in place.

Businesses are incentivised to reduce their energy consumption and transition to greener alternatives by the introduction of the carbon trading scheme. If businesses don’t reduce their consumption, they must buy more carbon credits. For businesses that use a lot of electricity, this disproportionally affects the overall price. Qualifying ‘intensive’ users can apply for Carbon Price Support Compensation to recoup their costs.

The use of the available energy tax relief schemes (Energy Intensive Industries Scheme and Carbon Price Support Compensation Credits) in tandem can produce sizeable energy cost savings.


Are you Paying More than you Need to in Energy Bills?

If you work in the chemical business industry, then you could be paying far more than you need to for your electricity. Reducing your costs or recouping energy costs that have already been paid out for can inject your company with money to re-invest into your people, your premises or your next big project.

Speak to our specialist Energy Team to find out more.


Talk to Bonham & Brook

We are uniquely positioned in the market to offer strategic, specialist tax advice and maximise on claims for R&D Tax and energy tax relief. If you work in an industry that is making waves with new developments, whilst operating in an energy-intensive environment then you could be missing out on various tax incentives that are available.

For funding to take your further – contact us on 020 3523 9125 or email

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