Corporation Tax basics
Understanding and paying Corporation Tax.
Corporation Tax
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
Guide summary
Check if your company's projects qualify for R&D tax relief. Calculate eligible costs and submit a claim with your Company Tax Return. Include an Additional Information Form with project details and costs. Claims must be made within 2 years of the accounting period end.
- Check if your project advances science or technology
- Calculate staff, subcontractor, and material costs for R&D
- Submit an Additional Information Form to HMRC first
- Include the claim on your CT600 Company Tax Return
- Deadline: 2 years after accounting period ends
- Merged scheme rate: 20% above-the-line credit
- ERIS rate: 27% for R&D-intensive loss-making SMEs
- Keep records of project plans and costs
- Apply for advance assurance if first-time claimant
- HMRC may check claims for eligible work and costs
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UK-wide
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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)
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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.
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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.
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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.
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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.
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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.