You'd really need to be a fool to fall for any of these myths about R&D tax credits, but, just in case, we separate fact from fiction.
The topic of toxic emission is a subject passionately debated and continues to make national headlines. Road transport makes a significant contribution to greenhouse gas emissions across the world, with the UK having one of the poorest emissions track records in Europe.
In 2008, the Government established the Climate Change Act (2008), a framework that set out a targeted and economically-credible plan to reduce current and future emissions, aiming to reduce greenhouse gas emission by at least 80% of 1990 levels by 2050. Progress on this framework is currently on track, but is set to derail on the fourth initiative (a reduction of 50% by 2025).
There is, therefore, a constant drive to seek solutions to the emissions problem. One such example has been announced recently, with the idea of a 'toxin tax' being discussed, where diesel drivers in 35 towns and cities across England could be taxed up to an extra £20 per day, or banned from the roads during peak hours.
This new legislation could result in many automotive companies benefitting from HMRC R&D tax credits.
Where are the toxins?
Most people will be aware of the recent, and ongoing, Volkswagen Group scandal, where they admitted to having installed "defeat devices" in 11 million diesel cars sold worldwide between 2008 and 2015.
The devices were designed to detect and adapt to laboratory tests, making the cars appear to comply with environmental standards when, in fact, they emitted pollutants called nitric oxides, or Nix, at levels that were on average four times the applicable European test-stand limit. These pollutants contribute towards smog, acid rain and tropospheric ozone, serious environmental and health concerns!
While Volkswagen has issued recalls of affected vehicles in both the U.S. and Europe, there are both ongoing challenges and irreversible impacts. Scientists at MIT and elsewhere have found the excess emissions have already had an impact on public health, and drivers that have experienced the so called 'fix' have reported performance issues, including mysterious rattles, poor fuel consumption, difficulties in starting, low power, and weak acceleration.
Where are the challenges in reducing car emissions?
In the aftermath of the Volkswagen emissions scandal, it's easy to see then why companies in the car manufacturing industry are currently heavily investing in research and development to improve the efficiency and environmental impact of the vehicles they produce.
Is your business currently involved in low carbon innovation projects? Whether a small cog in a big wheel, or a global manufacturer and distributor, you could qualify for government incentives to further your research and development.
Are you?
- investigating new combustion strategies to improve engine efficiency and reduce emission formation;
- improving the efficiency of after treatment technologies to reduce exhaust emissions;
- developing technology to convert excess heat generated from the engine into electricity, to provide an alternative power source;
- analysing and investigating alternative fuels or lubricants and their impact on performance and emissions; or
- designing and manufacturing vehicle components that are lighter or more aerodynamic?
Get rewarded for your business innovation
These are only a few pointers as to where research projects and processes to lower carbon emission may result in your ability to claim R&D tax relief.
The good news is that majority of the challenges businesses will be faced with, whilst seeking to extend the knowledge and capability of the automotive industry to reduce emissions, will fall within the boundaries of the R&D tax relief scheme, offsetting some of the financial risk posed to innovative companies.
R&D tax credits are considered to be one of the most attractive tax reliefs available, often resulting in significant cash repayments from HMRC. If you can demonstrate which of your activities qualify under the scheme, you can open up a new revenue stream to fund further R&D projects and facilitate business growth.
Jumpstart can help
Jumpstart is a leading R&D tax relief specialist, guiding companies through the complexities of submitting claims to HMRC.
Jumpstart's large team of technical analysts have specific scientific and technical backgrounds. Our technical analysts and their years of industrial experience who have resulted in an extremely high success rate in securing R&D tax relief for our clients.
