Knowledge bank
Straight answers, kept current.
The questions companies actually ask about R&D tax relief, answered plainly and reviewed on a schedule.
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12 topics · 53 answers
How the schemes work 4 answers Merged scheme, ERIS, and which one your accounting period lands in. Eligibility 6 answers Who can claim, who cannot, and the test HMRC applies. Qualifying activities 6 answers What counts as R&D, and where the project starts and stops. Qualifying expenditure 3 answers Staff, subcontractors, consumables, software and the rest. Contracted-out & subsidised R&D 3 answers Who owns the claim when someone else paid for the work? Making a claim 4 answers Deadlines, notifications, and the additional information form. Record-keeping & evidence 1 answer What to keep during the year so that the claim writes itself. HMRC, enquiries & compliance 9 answers What an enquiry looks like and how to answer one. Accounting & tax interaction 6 answers How the relief is implemented in the accounts and CT600 Adjacent reliefs 4 answers Patent Box, capital allowances and grant interaction. Sector notes 6 answers How the rules can hit differently by industry. Reference 1 answer Rates, thresholds and dates in one place.
How the schemes work
Merged scheme, ERIS, and which one your accounting period lands in.
- How is an R&D tax relief claim calculated? Essential read Add up qualifying expenditure, apply the rate for the scheme, then work through what the relief actually pays out — which is where the figure moves.
- What is enhanced R&D intensive support (ERIS)? Essential read The alternative to the merged scheme for loss-making SMEs whose R&D is at least 30% of total expenditure. Worth 26.97% of qualifying spend in cash, against 16.2% under the merged scheme.
- What is the merged R&D expenditure credit scheme? Essential read One scheme for almost every claimant in accounting periods beginning on or after 1 April 2024: a taxable 20% credit, worth 15% or 16.2% after tax depending on the claimant.
- Which R&D scheme applies to my company? Essential read Start with the date your accounting period began, not your company size. That one date decides whether you are in the merged scheme era or the legacy SME and RDEC rules.
Eligibility
Who can claim, who cannot, and the test HMRC applies.
- Can a company limited by guarantee claim R&D tax relief? Yes, unless it is a charity or another excluded body. Having no share capital is irrelevant — what matters is being a company within the charge to corporation tax and carrying on a trade.
- Can an overseas company claim UK R&D tax relief? Only through a UK permanent establishment that is within the charge to corporation tax. Where the company is incorporated does not matter; whether it is taxed here does.
- Can my company claim R&D tax relief? You need to be a company within the charge to UK corporation tax, carrying on a trade, with expenditure on a qualifying project that is deductible in computing the profits of that trade.
- Does my company have to be a going concern to claim R&D tax relief? Yes, to receive money. The test looks at your latest published accounts and at whether you are in administration or liquidation, and it is applied when the claim is made.
- Is my company an SME for R&D tax relief purposes? Fewer than 500 staff, and either turnover of €100 million or less or a balance sheet total of €86 million or less — but tested on your company aggregated with its linked and partner enterprises.
- Who can't claim R&D tax relief? Essential read Charities, universities, scientific research organisations and health service bodies are excluded by name. So is anything that is not a company — partnerships, LLPs and sole traders.
Qualifying activities
What counts as R&D, and where the project starts and stops.
- How do I know if I'm doing R&D? Essential read You are doing R&D if a project sought an advance in overall knowledge or capability in science or technology by resolving uncertainty a competent professional could not readily resolve.
- How do I work out what was already known in my field? Establish what a competent professional could find or deduce from publicly available knowledge at the start of the project, record the search, and date it.
- What counts as an advance in science or technology? An advance is an increase in what the field as a whole knows or can do — measured against publicly available knowledge, not against what your company could do before.
- What is scientific or technological uncertainty? Essential read Uncertainty exists when a competent professional in the field cannot say whether something is achievable, or how to achieve it, from knowledge that is publicly available or readily deducible.
- What work doesn't qualify as R&D? Routine work, commercial and aesthetic development, excluded fields, and anything done before the uncertainty was identified or after it was resolved.
- Who counts as a competent professional? Essential read Someone knowledgeable in the relevant scientific or technological principles, aware of the state of knowledge in the field as a whole, with real experience and a track record in it.
Qualifying expenditure
Staff, subcontractors, consumables, software and the rest.
- How do I work out how much of an employee's time counts as R&D? Only the proportion of a director's or employee's time directly and actively engaged in R&D qualifies. The law sets no method for measuring it, but the method used has to be explainable and checkable.
- What costs can I include in an R&D claim? Essential read Seven categories of revenue cost qualify: staff, externally provided workers, contractors, consumables, software, data and cloud, and clinical trial payments.
- Which staff costs can I include in an R&D claim? Essential read Earnings, reimbursed employee expenses, employer's secondary Class 1 NIC and employer pension contributions, apportioned to the time each person spends on qualifying R&D.
Contracted-out & subsidised R&D
Who owns the claim when someone else paid for the work?
- Can I claim R&D tax relief if I've had a grant? Yes. For accounting periods beginning on or after 1 April 2024 a grant does not reduce your R&D claim at all. Before that it did, and by how much depended on the grant.
- Is my R&D expenditure subsidised? For accounting periods beginning on or after 1 April 2024 it does not matter — the subsidised expenditure rules were not carried into the merged scheme or ERIS.
- Who claims the R&D relief when the work is done for someone else? The party that intended or contemplated the R&D when the contract was signed. If your customer did not know R&D would be needed, you claim.
Making a claim
Deadlines, notifications, and the additional information form.
- Do I have to tell HMRC before I claim R&D tax relief? Essential read You must file a claim notification within six months of the end of your period of account if you have not claimed R&D relief in the previous three years. Miss it and the claim is invalid.
- How long do I have to make an R&D claim? Essential read Two years from the end of your period of account. In practice you have two open years at any one time, and there is no route back to a year that has closed.
- What happens to my R&D claim if I change my year end? One set of accounts becomes two accounting periods, two tax returns and two information forms. Your notification deadline moves with the accounts, and usually later than you expect.
- What is the R&D additional information form? Essential read A mandatory online form setting out your costs and projects. Every R&D claim made on or after 8 August 2023 needs one, filed before or with the tax return, or HMRC removes the claim.
Record-keeping & evidence
What to keep during the year so that the claim writes itself.
HMRC, enquiries & compliance
What an enquiry looks like and how to answer one.
- Can HMRC reopen my R&D claim after the enquiry window has closed? Only if you were careless or deliberate, or if a well-informed officer couldn't have spotted the problem from what you disclosed. A discovery assessment isn't a second chance for HMRC to look harder.
- How do I apply for HMRC advance assurance on my R&D claim? Two services, two routes. Targeted assurance covers one area via a short online form; full claim assurance covers the whole claim, for genuine first-time claimants, via a Government Gateway form.
- Is HMRC introducing an advance clearance system for R&D claims? Not yet. What exists is an advance assurance pilot running to May 2027 — one of three options a 2025 consultation considered. A fully binding pre-claim system is still undecided.
- What can HMRC require me to provide during an R&D enquiry? HMRC can formally require information and documents reasonably needed to check your claim. You can appeal most requirements within 30 days — but not for your statutory records.
- What happens if HMRC opens an enquiry into my R&D claim? Essential read HMRC opens an enquiry by formal notice, usually within a year of filing, asks questions or requests information, then issues a closure notice you can appeal within 30 days.
- What happens if I disagree with an HMRC decision on my R&D claim? You can ask HMRC to review its own decision, or notify the appeal straight to the tax tribunal. Both routes carry strict 30-day deadlines, and mediation can run alongside either.
- What is a volume compliance check on my R&D claim? HMRC risk-assesses every R&D claim and formally checks around one in six. Most checks are resolved by correspondence, but some claims are removed by a 'correction notice' you can reject.
- What penalty could apply if my R&D claim turns out to be wrong? None, if you took reasonable care — being wrong isn't careless. Penalties run 0% to 100% of the tax lost, and HMRC must explain why your behaviour was careless or deliberate, not just assert it.
- What standards does HMRC expect from my R&D tax adviser? From 18 May 2026, paid tax advisers, including on R&D claims, must register with HMRC and pass a fit-and-proper test. Professional body members are also bound by a separate, more detailed code.
Accounting & tax interaction
How the relief is implemented in the accounts and CT600
- Can HMRC use my R&D tax credit to pay off other tax debts? Yes. HMRC can set any repayable sum, including an R&D credit, against CT, PAYE or VAT debts or a contract settlement, without asking first — but it must tell you in writing once it has.
- How and when do I actually receive R&D tax relief money? HMRC aims to process 85% of claims within 40 days, but "processed" can mean a query or a compliance check, not just payment. You also have to be a going concern to be paid at all.
- How do I account for an R&D tax relief claim in my company's accounts? Essential read The R&D credit's tax treatment depends on the scheme: the merged scheme credit is taxable, the ERIS/SME credit is not. It's recognised under ordinary current tax rules, not a grant standard.
- How does group relief interact with an R&D claim? The merged scheme lets you surrender the credit itself to a group company. SME/ERIS works differently: choose how much loss to claim as credit, and surrender the rest as group relief.
- What does it mean for an R&D tax credit to be "above the line" or "below the line"? The merged scheme's credit sits above the line as taxable income, netted down by a notional tax deduction. The SME/ERIS credit sits below the line and is never gross taxable income at all.
- What is the PAYE and NIC cap on the R&D tax credit? The payable credit is capped at £20,000 plus three times the PAYE and NIC of your R&D staff. The excess isn't lost outright, but what happens to it differs sharply by scheme.
Adjacent reliefs
Patent Box, capital allowances and grant interaction.
- Can we claim R&D tax relief as well as a creative industry relief? Often yes, but never on the same expenditure. Where a cost qualifies for R&D relief it is generally locked out of the creative relief, whether or not you make an R&D claim.
- How do capital allowances interact with an R&D tax relief claim? R&D relief covers revenue spending and capital allowances cover capital spending, so they do not overlap. One item of capital expenditure gets one allowance, and which one you take matters.
- What are research and development allowances (RDAs)? RDAs give a 100% deduction for capital spending on R&D, including buildings — which R&D tax relief cannot reach. Land is excluded, and selling the asset triggers a charge.
- What is the Patent Box and could my company benefit? The Patent Box taxes profits from patented inventions at an effective 10%. You have to elect into it, and how much you get depends on how much of the underlying R&D you did yourself.
Sector notes
How the rules can hit differently by industry.
- Can a motorsport or automotive business claim R&D tax relief? Some of it does. Designing a component to resolve a genuine technical unknown can qualify; setting up, optimising and selecting between existing parts does not, however hard-won the lap time.
- Does aerospace work qualify for R&D tax relief? Much of the design and development does. Certification does not — and the line between proving a design and developing one is where most aerospace claims are won or lost.
- Does defence work qualify for R&D tax relief, and how do you claim it? Much of it does, on the ordinary test. The hard part is evidential: HMRC has published nothing on classified work, so the claim has to describe the technology without the application.
- Does engineering or manufacturing work qualify for R&D tax relief? Often, and more often in the process than the product. The hard question is rarely whether the work was R&D — it is whether you or your customer is entitled to claim it.
- Does quantum or advanced science work qualify for R&D tax relief? Almost always some of it. The difficulty is not whether the science is hard enough — it is framing the advance at the right level and keeping the cost boundary defensible.
- Does software development qualify for R&D tax relief? Often, but not because it is difficult or new to you. The test is whether a competent developer could have said at the outset how to do it — and proving that is where claims fail.
Reference
Rates, thresholds and dates in one place.
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