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R&D Tax Credits for Automotive

The automotive industry is often hung out to dry whenever there’s talk of greenhouse gasses, pollution, or road safety issues. None of this considers the great strides your industry has made over the past few decades — all at its own expense and on its initiative.

Today’s safer roads and cleaner, more efficient vehicles result from your past investment in research and development (R&D). The increasing pressure for greener solutions has transformed the UK automotive sector and reshaped its R&D programmes. 

Every year, small to medium automotive companies plough millions into R&D. Yet many are still underclaiming on R&D tax credits — or aren’t even claiming at all. One of the reasons is the misconception that the world of R&D sits firmly with scientists in white lab coats rather than mechanics in oily overalls. 

One automotive sector that should be making more of the R&D tax relief is classic, vintage and antique car restoration companies developing new components and improving on the original performance cars. Very few realise that they can claim a generous tax deduction or even a lump sum from HMRC.

The government designed the R&D tax credits scheme to inspire innovation. There are lots of activities that you can claim for — even those you consider as just a daily routine.

car spanners

Automotive projects that may qualify for R&D tax relief include:

  • Alternative fuels and improved fuel formulas
  • Manufacturing and assembly strategies and techniques to scale up engineering prototypes to enable production at full rate
  • Lightweight car engines that are significantly more powerful, without compromising safety, reliability, and performance
  • Developing race cars using CFD techniques, e.g.
    • modelling and analysis of existing cars
    • changes through previous baseline analysis
    • subsequent iterative improvements via analysis
    • patterns, moulds, and components to complete testing and validation
 

Key questions on R&D tax relief answered

What activities can be included in a R&D project?

  • Defining technical objectives
  • Identifying uncertainties
  • Feasibility studies, reviewing new and competing technologies
  • Analysing, designing and developing the technology
  • Producing technical specification or other documents to explain and support the R&D project and advancement
  • Testing the product, process, service or software
  • Planning and managing projects
  • Administration, finance and personnel services specifically required to support R&D activities
  • Training to support R&D

What expenditure can be claimed for in a R&D project?

  • Staff Costs – Employee costs (salary, national insurance and employer pension) are apportioned for their time spent on the R&D project plus any reimbursed associated business expenses
  • Software – Purchased for R&D purposes and costs apportioned for any subsequent use
  • Subcontracted R&D – You can claim 65% of what you paid your R&D subcontractor
  • Utilities & Consumables – Water, fuel, power and material used in the project
  • Prototypes – Produced for R&D purposes

About Easy R&D’s R&D tax credit claim process

Claiming R&D tax relief is a niche.

Here at Easy R&D, we’ll probe your company’s activities to reveal the true extent of your company’s R&D.

Averaging £54,000 per claim, we’re a business built around expert tax professionals, skilled technical report writers, and flawless processes to ensure your R&D claims are successful — with maximum return. You could even reduce your corporation tax bill to zero.

HMRC’s criteria for claiming is purposefully broad, so what qualifies may surprise you.

 

Interested in claiming R&D tax credits?