R&D tax credits explained
Our specialist team has helped 100s of innovative businesses secure R&D tax relief
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What are R&D tax credits?
Research and development (R&D) tax credits are a UK government incentive that supports companies investing in projects that advance science or technology. Depending on your circumstances, the benefit is delivered as a reduction in Corporation Tax or, for some loss-making companies, a payable credit.
To qualify, the work must meet HMRC’s definition of R&D: your project should aim to achieve a scientific or technological advance by tackling uncertainty that a compatant professional cannot readily resolve. In practice, that means it’s not enough to improve something that already works. The project needs genuine technical challenges, resolved through systematic development and testing.
Which scheme applies to you?
Merged R&D expenditure credit (RDEC)
This is the default route for most companies. It’s an above-the-line, taxable expenditure credit, calculated on your qualifying R&D costs. The headline rate is 20% of qualifying spend (note: because it’s taxable, the net benefit is lower and depends on your tax position).
Enhanced R&D intensive support (ERIS)
ERIS is only for loss-making, R&D-intensive SMEs that meet the intensity condition (where relevant R&D spend is at least 30% of total expenditure, including connected companies where applicable).
If you qualify, ERIS provides enhanced support through two linked benefits: an enhanced 186% total deduction (100% in the accounts plus an extra 86% in the tax computation) and the option to claim a payable credit worth up to 14.5% of the surrenderable loss (not taxable).
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Who can claim R&D tax credits?
R&D tax relief is intentionally broad, so it can support innovation across virtually any sector, from construction and manufacturing to energy, life sciences, and financial services.
What matters isn’t your industry, it’s whether the work meets HMRC’s definition of R&D (a scientific or technological advance achieved by resolving uncertainty).
A claim can still be valid even if the project didn’t succeed or never reached market. In many cases, you can also claim for qualifying work delivered for a client, as well as your own internal projects, as long as responsibilities and costs are correctly identified under the rules.
How R&D tax credits have evolved
R&D tax relief has changed a lot in the last few years. What started as separate routes for SMEs and larger companies has now moved to a merged scheme for accounting periods beginning on or after 1 April 2024, with additional support available for loss-making, R&D-intensive SMEs. Alongside this, HMRC has introduced extra administrative steps and increased focus on evidence and governance.
The practical takeaway: the opportunity is still there for genuine R&D, but it's never been more important for claims to be clearer, better evidenced and properly structured. Working with an experienced R&D tax credit specialist can help you interpret the rules correctly, build an HMRC-ready narrative and cost breakdown, and reduce the risk of avoidable issues during review.
Key facts about R&D tax relief
Our approach to R&D tax credit claims
R&D claims are under more scrutiny than ever. Our job is to make the process straightforward for you, while keeping every submission clear, evidence-led and compliant.
Not sure if what you do counts as R&D? You’re not alone
For tax purposes, R&D isn’t about reinvention, it’s about tackling scientific or technological uncertainty to achieve an advance in science or technology. That could include developing or improving a product, process, device or software where the solution isn’t readily available, and projects can still qualify even if they don’t succeed commercially.
Over 50% of the clients we work with didn’t realise they qualified for R&D tax relief before speaking to us
Qualifying costs for R&D activity
What you need to do to submit a compliant R&D tax credit claim
Step 1: Check whether you need to notify HMRC
Before you start your claim, check whether a claim notification form is required. This can apply if you’re claiming for the first time, or if there’s been a long gap since your last claim, and missing the notification window can prevent a claim from being made.
Step 2: Submit the Additional information form (AIF)
For each accounting period you’re claiming, you must submit an Additional information form before, or on the same day as, your CT600. If you submit on the same day, the AIF must be filed first. If the AIF isn’t submitted correctly, the claim won’t be accepted.
Step 3: Build evidence that matches the story
Strong claims are backed by clear records created as the work happens. Capture the uncertainty you were trying to resolve, what you tried and why, what changed as the project progressed (including test results and failures), and who did the work and how their time was spent. This keeps your claim aligned with HMRC expectations and reduces friction if questions are raised.
Taken together, these steps keep your claim smooth, compliant and well supported, so you can focus on the work you’re building rather than the admin around it.
R&D tax credit rates
R&D tax credits are calculated based on the qualifying expenditure your business has invested in innovation. The level of relief depends on which part of the R&D tax credit scheme your business falls under, with different rates applying in each case.
Under the merged scheme, £100,000 of qualifying R&D spend generates £20,000 of credit, which is then taxed so the net benefit is typically about £15,000 per £100,000 for a company paying 25% Corporation Tax (it can be higher or lower depending on your tax position).
If you qualify for ERIS (for loss-making, R&D-intensive SMEs), you can often convert part of the claim into a cash payment worth up to 14.5% of the surrenderable loss.
The table below outlines the current rates available.
What are R&D tax credits?
Research and development (R&D) tax credits are a UK government incentive that supports companies investing in projects that advance science or technology. Depending on your circumstances, the benefit is delivered as a reduction in Corporation Tax or, for some loss-making companies, a payable credit.
To qualify, the work must meet HMRC’s definition of R&D: your project should aim to achieve a scientific or technological advance by tackling uncertainty that a compatant professional cannot readily resolve. In practice, that means it’s not enough to improve something that already works. The project needs genuine technical challenges, resolved through systematic development and testing.
Find out if you qualify for R&D funding
Discover which UK government incentives your business could qualify for with our quick and easy self-assessment tool. In just a few minutes, you’ll receive a tailored report outlining the funding opportunities available to support your innovation and growth.
R&D tax credits, grants, Patent Box and R&D allowances are all schemes are designed to help ambitious businesses like yours thrive. Don’t leave potential funding untapped: it could be the key to fuelling your next big idea.
R&D tax credits – FAQs
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