Innovation funding in aerospace and defence

The UK’s key aerospace and defence sector is poised to expand.

In aerospace, historically a crown-jewel in UK exports, airlines and passengers are demanding more cost-effective and environmentally friendly journeys. In defence, the government’s plan to increase spending from 2.3% to 2.5% of GDP from April 2027, cements its position as a priority UK growth sector. Research and development will play a significant part – stimulating growth and creating jobs.

For innovative business, there has never been a better time to partner with ForrestBrown. As the UK’s leading tax reliefs and incentives specialist, we ensure maximum value for your investment. Whether you’re an aircraft systems producer, satellite manufacturer or cybersecurity expert, unlock opportunity with innovation incentives including R&D tax relief, grants, patent box and capital allowances.

The value of R&D tax relief in aerospace and defence

If you’re new to R&D tax relief, we can help you review your eligibility for it. If you’re already claiming, we can review your previous claim and existing process, ensuring that your claims are fully optimised while protected from risk. At the same time, we can also assess your eligibility for other innovation incentives, aligning your funding strategy to your business’s needs.

Drone engine and propeller.

Defence: a priority UK growth sector

The government’s drive to expand our national security capabilities will see the UK spend up to 3% of its GDP on defence in the next Parliament.

Innovation incentives and reliefs will play a key role in supporting those ambitions. From grants and R&D tax relief, to Patent Box relief and capital allowances, discover which innovation incentives your business may be eligible for.

Opportunities for innovation

From materials development to naval architecture; cyber technology to robotics; the varied nature of aerospace and defence means that innovation can be found in an array of projects. Here are just a few examples:

How ForrestBrown can help

Our multi-disciplinary team of chartered tax advisers, accountants, lawyers, and industry-experienced science and technology specialists bring unmatched expertise to your business to help you secure the funding you’re eligible for.

Our aerospace and defence specialists have deep insights into R&D in the sector, while our tax experts deliver technical advice in plain English to provide you with practical and actionable business outcomes tailored to your needs.

MoD security clearance

Importantly, several members of our team have MoD security clearance and can work with you on sensitive projects. Often, we won’t even need the secret detail of a project to enable us to document your R&D for HMRC; just the nature of the technology used to support it. Your data is then securely stored by us, using our systems and technologies.

R&D tax relief for aerospace and defence

The R&D tax relief incentive is designed to reward forward-thinking businesses for their investment in innovation, enabling reinvestment and spillover benefits for the wider economy. We’ve supported countless aerospace and defence businesses to access the relief, from high-growth start-ups to large multinationals.

Our multi-disciplinary team will help to qualify your R&D, quantify your claim and provide seamless end-to-end processing via our secure systems. Our industry-experienced technical experts help to bridge the gap between your experts and HMRC, ensuring that your projects are translated into accessible language for your claim documentation.

While we typically work directly with businesses on their R&D claims, we also partner with accountants that have aerospace and defence sector clients to support their claims. We do this on a flexible basis and can offer support tailored to your needs, from one-off claim reviews to full enquiry support.

Find out about opportunities for accountants to work with ForrestBrown by signing up to our newsletter, R&D Bites.

Grants for aerospace and defence

ForrestBrown’s expertise in securing grant funding includes supporting businesses in the aerospace and defence sector. Current funding opportunities include the Aerospace Technology Institute’s (ATI’s) funding programme, which aims to maintain and accelerate growth in the sector while making it more sustainable.

Innovate UK also offers competitions, such as:

  • Dual-use Aviation Systems & Autonomy – supporting aviation technologies and systems for both civil and military use cases.
  • Counter UAS Technologies – supporting counter Uncrewed Aerial Systems (UAS) dual use technologies.

Our expert grant advisory team, led by Karim Budabuss, has extensive experience in advising on all aspects of the grant funding process. This includes feasibility assessment, preparing and submitting a grant application and all related due diligence. We can also provide application reviews as well as additional capacity for in-house teams working to tight deadlines.

Stay up to date with relevant grant opportunities by signing up to our regular newsletter, GrantScan.

Patent Box relief for aerospace and defence

New products or processes are often patented to protect the value of the IP. If you have a patent in aerospace and defence, have you considered claiming Patent Box relief? This valuable relief on patented products or processes reduces the Corporation Tax (CT) rate on qualifying IP income to 10%.

Our experienced Patent Box team can support you with your claim and dispel any misconceptions you may have on eligibility and process.

Location strategy for aerospace and defence

Finding the best location for your business will involve taking myriad factors into consideration. These will include transport connectivity, supply of labour and availability of location incentives.

Our trusted team is experienced in identifying the ideal location and negotiating with local and regional authorities to secure location incentives.

Whether you’re a satellite manufacturer weighing up space clusters or a multinational aerospace business seeking a new international home, we can support your location search.

Capital allowances for aerospace and defence

Scaling up manufacturing capacity invariably requires investment in new plant and equipment. This may qualify for capital allowances relief, bringing significant cash flow benefits to your business.

Our capital allowances team, led by Peter Reynolds, can help review your eligibility for the relief, as well as creating the claim and submitting it for review. We can either work directly with you to amend your Corporation Tax return (CT600) or work with your accountant to do so.

Examples of aerospace and defence firms advised by ForrestBrown

Drone technology company

This unmanned aerial vehicle (UAV) technology business is pioneering hybrid power systems combining conventional electric-powered rotors with jet systems to achieve heavy-lift drones capable of carrying large payloads. Seeking to increase the power and number of jets required development to appropriately balance the propulsion systems, the angles of the jets and the relative sizes of the rotor blades.

Benefit: £93k

Software engineering company

This engineering research organisation provides technical expertise and secure on-site data centres to support new product development in the aerospace industry. This involves working across multiple software platforms, each designed for specific modelling or simulation tasks. The company sought to develop a new platform for hosting, deploying and scaling specialised simulation models in a cloud-hosted environment.

Benefit: £340k

Aerospace systems company

This aerospace company undertook to retrofit a radome into an aircraft cabin door that would thereby be a part of the aircraft’s pressure vessel while also adequately shielding radiofrequency radiation, with design and testing to validate it would perform safely when subject to a range of pressure changes across the door during flight.

Benefit: £1.2m

Speak to our expert team today

We’re passionate about helping businesses in the aerospace and defence sector access funding. Whether you’re interested in discussing your eligibility for R&D tax relief or progressing an application for ATI funding, we’d love to hear from you.

Find out more.