R&D Tax Relief for Classic Car Restorers

Research and Development (R&D) Tax Relief can help classic and vintage car restoration companies claim a generous tax deduction or a cash refund from HMRC.

R&D tax relief is a tax incentive from the UK Government designed to encourage innovation and global competitiveness. The scheme has been around since 2000 and last year over 25,000 UK companies claimed almost £2.9bn in tax relief.

Profit-making SMEs can reduce their corporation tax bill by up to 230%, e.g. an additional £130 deduction on top of £100 spent of qualifying R&D expenditure. Loss-making SMEs can choose to surrender their loss and receive a tax relief by way of a credit – a cash refund paid by HMRC of up to £33,350 for every £100,000 spent on qualifying R&D expenditure.

During COVID19, HMRC are processing 95% of repayments within 28 days. Corporation tax repayments can be much quicker. A timely cash boost for many businesses.

Qualifying R&D Activities

A qualifying project is one where there is an advance (or an attempted advance) in a field of science or technology. This sounds quite restrictive, but in practice it could apply to any company and in any industry. The term “Science” is very broad and can include Computer Science, Food Science, Engineering, Medical / Clinical Research etc.

The company needs to have a systematic project in place, and the work which you are undertaking must be seeking to achieve an advance in science or technology, e.g. development a new product, process or service, or appreciably improving an existing one.

Generally, where a company has faced technical problems that have to be solved and there is no standard solution which could be utilised, then that is a good indicator that R&D activities are taking place.

As per the government definition, to qualify for R&D tax relief, your project must seek to:-

Extend overall knowledge or capability in a field of science or technology; or
Create a process, material, device, product or service which incorporates or represents an increase in overall knowledge or capability in a field of science or technology; or
Make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes; or
Use science or technology to duplicate the effect of an existing process, material, device, product or service in a new or appreciably improved way (e.g. a product that has exactly the same performance characteristics as existing models, but is built in a fundamentally different manner), will therefore be R&D.

For classic car restorers, qualifying R&D projects can include:-

Performance enhancing design work – improving rpm, horsepower and fuel efficiency
Innovative engine rebuild and redesign projects
Reboring, machining or designing of components
Developing engineering drawings and specifications
Performing CAD modelling
CNC machining
Designing and developing moulds, jigs, dies and fixtures
Improving metalwork including casting, welding and grinding
Design and development of new tools
Improving product quality

Stating Your R&D Claim

Jeffreys Henry LLP provide an end-to-end service that makes claiming R&D tax credits easy for you.

Our dedicated R&D account manager will work with you to document each R&D activity and split out the qualifying costs. Once finalised, we’ll submit your claim to HMRC’s specialist R&D unit.

FURTHER R&D TAX ADVICE

CONTACT US FOR FURTHER INFORMATION, OR TO REVIEW YOUR R&D CLAIM.

PARMINDER CHATTHA

Partner - Corporate and R&D Tax

Parminder specialises in Research & Development Tax Credits, leading the R&D department at Jeffreys Henry LLP. Since joining the Firm in 2015, he has been working closely with both SMEs and large businesses to analyse and maximise their Research and Development claims. He has so far secured over £70 million in R&D tax relief and credits for our clients.

R&D Tax Relief for Classic Car Restorers

KATE GREENHOUGH

R&D Director

Kate is a CTA qualified tax specialist with significant R&D tax experience. Kate has over 10 years of specialist experience in advising start-ups to PLC analyses, preparing and submitting robust R&D tax relief claims and Patent Box claims in line with the latest HMRC guidance. Her sector experience spans FMCG (fast-moving consumer goods), automotive, financial services, healthcare, manufacturing, construction, and food and drink.