Where the engineering genuinely runs out
Qualifying work is where the field’s capability, not the company’s, has to be pushed. Novel traction-motor topologies and e-axle behaviour that cannot be reliably predicted; battery cell chemistry and pack architectures that resist thermal-runaway propagation or fast-charge without accelerated degradation; power electronics using silicon-carbide or gallium-nitride devices to push efficiency and density beyond the known art; autonomy and sensor-fusion methods for edge cases where the technical approach is genuinely uncertain, not merely meeting a functional-safety standard. It is also in lightweighting, novel composites and alloys, joining dissimilar materials, and in manufacturing processes such as gigacasting or dry-electrode coating where scaling introduces real process uncertainty. Integrating subsystems into a vehicle can itself carry genuine system-level uncertainty, and that route is recognised.
The work that feels like R&D but is not
Most vehicle engineering, however skilled, sits outside the definition. Styling and the appearance of exterior and interior are cosmetic and expressly excluded. Routine engineering to established standards, standard simulation, and calibration and tuning to a specification are known-method work. Fitting a catalogue motor, standard harness or off-the-shelf ECU to an established pattern is integration, not advance. And once a working prototype exists, the march through homologation, type-approval, production tooling and ramp-up is not R&D.
Who claims: the supply-chain question
This is where automotive claims most often go wrong. Deep tiers of suppliers make entitlement fact-sensitive. Under the merged scheme, the party that decided on and contracted out the R&D generally claims, judged on the contract and the surrounding circumstances. Where an OEM directs a development, the Tier 1 or Tier 2 supplier doing the work may not be the claimant. Read the contracts before scoping, because the real risk is two parties claiming the same work, or neither claiming it.
Sector pitfalls we would check first
- Bespoke is not an advance. Low-volume, motorsport and customer-specific builds are common; “new for this customer” is a commercial fact, not a technological one.
- The contracted-out question. Confirm who directed the R&D before anything else. The merged-scheme rules on subcontractors decide whose claim exists.
- The overseas restriction. For periods from 1 April 2024, overseas contractor and worker costs are excluded unless the conditions genuinely cannot be replicated in the UK. Specific cold-weather or altitude proving-ground testing may qualify; offshoring engineering for cost does not.
- Grants, and the period. Grant funding no longer reduces the claim for periods from April 2024, but the period has to be right, and grant-funded costs must not be double-counted. The cost rules are on qualifying costs.
Frequently asked questions
We do bespoke and low-volume builds. Does that qualify?
Not because it is bespoke. A one-off or customer-specific build is a unique product, not a technological advance. It qualifies only where you had to resolve a genuine technological uncertainty a competent automotive engineer could not readily resolve, not because the vehicle was new for that customer.
We are a supplier to an OEM. Whose claim is it?
It depends on the contract and the circumstances. Under the merged scheme, the party that decided on and contracted out the R&D generally claims, so where an OEM directs the work the supplier may not be the claimant. This is the single biggest automotive boundary issue: get it wrong and either both parties claim or neither does.
Does testing and homologation qualify?
Usually not. Once a prototype with the full functional characteristics of the design exists, R&D has ended. Crash, EMC and durability testing done to demonstrate a design meets a standard is a regulatory step, not the resolution of uncertainty. Testing done to resolve a genuine technical uncertainty is different, and can qualify.
We received an APC or Innovate UK grant. Can we still claim?
Yes. For accounting periods beginning on or after 1 April 2024, the merged scheme dropped the old restriction that reduced grant-funded R&D, so the grant no longer cuts your claim. Do not double-count the grant-funded costs, and check the ERIS interaction.