Guide

Claim R&D tax relief for your company

How to claim R&D tax relief under the merged scheme and ERIS for innovative UK companies.

UK-wide

What is R&D tax relief

Research and Development (R&D) tax relief lets your company reduce its Corporation Tax bill or receive a cash credit for eligible R&D expenditure. If your company is working to advance science or technology by overcoming uncertainty, you may qualify.

From 1 April 2024, R&D claims use the merged scheme (combining the former SME scheme and RDEC into a single above-the-line credit) or the Enhanced R&D Intensive Support (ERIS) scheme for R&D-intensive loss-making SMEs.

Does your work qualify

Your project must seek an advance in science or technology. The advance must be one that is not readily deducible by a competent professional in the field. Specifically, the project must:

  • Aim to achieve an advance in overall knowledge or capability in a field of science or technology
  • Encounter scientific or technological uncertainty that cannot be readily resolved
  • Involve work to overcome that uncertainty

R&D is not limited to laboratories. Software development, engineering improvements, food science, construction methods, and manufacturing processes can all qualify if they meet the criteria above.

Qualifying expenditure

You can claim relief on:

  • Staff costs: Salaries, wages, NIC, and pension contributions for employees directly engaged in R&D
  • Subcontracted R&D: Payments to subcontractors for R&D work (restrictions apply)
  • Consumables: Materials, utilities, and software used up or transformed in the R&D process
  • Externally provided workers: Agency staff working on your R&D
  • Data and cloud computing: Costs of datasets and cloud services used in R&D (from April 2023)

  1. Identify qualifying projects

    Review your company's work to find projects that sought to achieve an advance in science or technology through resolving uncertainty. Document the baseline knowledge and the advance sought.

  2. Calculate qualifying expenditure

    For each qualifying project, identify staff costs, subcontractor payments, consumables, and data/cloud costs directly attributable to the R&D activity.

  3. Prepare your claim

    Since 8 August 2023, all R&D claims require an Additional Information Form submitted to HMRC before filing the CT600. This must include: a description of each project, the advance sought, the uncertainty faced, and a breakdown of costs.

  4. Submit with your CT600

    Include the R&D claim on your Company Tax Return. Claims must be made within 2 years of the end of the accounting period to which they relate.

  5. Consider advance assurance

    First-time claimants can apply for advance assurance from HMRC, confirming their planned R&D work qualifies before they make the claim. This provides 3 years of certainty.

HMRC compliance checks

HMRC has significantly increased scrutiny of R&D claims since 2023. Common reasons for enquiry include:

  • Claiming for work that is routine or does not involve genuine technological uncertainty
  • Including ineligible costs (such as commercial production or market research)
  • Inadequate documentation of the technical narrative
  • First-time claims or claims that appear disproportionate to the company's size

Keep contemporaneous records of your R&D activity, including project plans, technical meeting notes, and time allocation records.

Research and Development tax relief