Frequently asked questions

It depends on when your accounting period begins and on your tax position. For periods beginning on or after 1 April 2024 there are two schemes: the merged R&D expenditure credit, the default for companies of every size, and Enhanced R&D Intensive Support (ERIS) for a loss-making SME whose relevant R&D expenditure is at least 30% of its total relevant expenditure. That denominator is broadly the trading costs in its accounts for the period, not just the R&D ones. Periods that began before 1 April 2024 fall under the old SME and RDEC schemes, which remain open to amendment for roughly two years after the period ends. Our guide to which scheme applies works through the decision step by step.

Under the merged scheme, £100,000 of qualifying spend generates a £20,000 gross credit. Because the credit is taxable, the net benefit is £15,000 at the 25% corporation tax rate, or £16,200 where the 19% rate applies or the company is loss-making. Under ERIS, a loss-making R&D-intensive SME with sufficient losses receives £26,970 in cash on the same spend: £100,000 x 186% x 14.5%. Your own figure depends on scheme, tax position and losses. Our calculator gives an estimate on your numbers, and the merged scheme guide shows the full workings. Five claims are costed in full in our worked examples.

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ERIS is the higher-rate relief for loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure, with connected companies counted on both sides of the ratio. It works through an additional 86% deduction (186% in total) and a payable credit of 14.5% of the surrenderable loss, worth up to 26.97p per £1 of qualifying spend. The credit is not taxable. A one-year grace period can protect a company whose intensity later dips, but only where it met the intensity condition in its most recent prior 12-month accounting period and obtained relief for it. See the full ERIS guide, or test your ratio with the ERIS intensity calculator.

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Yes. Loss-making companies claim under the merged scheme and receive the credit in cash, worth 16.2p per £1 of qualifying spend after notional tax at 19%, subject to the PAYE cap. Loss-making SMEs that pass the 30% intensity test can claim ERIS instead, worth up to 26.97p per £1. Making a loss does not weaken a claim; for R&D-intensive companies it opens the most generous rate in the system.

Yes. For accounting periods that begin on or after 1 April 2024 the subsidised-expenditure rules are gone, so an Innovate UK award, or any other grant, leaves the merged scheme and ERIS alone: you can take both. Most of what is still online describes the old SME position, where grant funding pushed spend into a lower-value scheme, and that analysis now bears only on claims for earlier periods. One narrow carve-out applies to companies registered in Northern Ireland claiming ERIS; Great Britain registrations are unaffected. Our grants guide has the current position in full.

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Yes — a ceiling on cash, not on the claim. No company takes more payable credit from a period than £20,000 plus three times its relevant PAYE and National Insurance. “Relevant” is adjusted for connected companies: added where one supplies you, removed where you supply one — in each case only the payroll behind that supply. It applies under the merged R&D expenditure credit and ERIS alike. Under the merged scheme the restricted amount carries forward as an expenditure credit for the next period. Under ERIS the credit does not carry forward at all: what survives is the loss the company chooses not to surrender, so an ERIS claim must be sized to the cap before filing. An exemption lifts the cap altogether, on two conditions about the company’s own intellectual property and its connected-party spend: what is the PAYE cap on R&D tax credits? sets out what each demands. If your payroll is small and your R&D is largely subcontracted, model the cap before the year end.

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Yes, for accounting periods that began before 1 April 2024, provided the claim window is still open. Claims can generally be made for two years from the end of the period of account, so the last standard deadlines for old-scheme claims fall in late March 2027. Take care with claim notification: a company caught by the notification requirement that missed its six-month window cannot rescue the claim, even where the amendment deadline is still open. Our guide to backdated claims covers the remaining runway and the traps.

Four things: your company must be subject to UK corporation tax, carrying out qualifying R&D — a project seeking an advance in a field of science or technology through resolving uncertainty that a competent professional could not readily resolve — and spending money in the qualifying cost categories, such as staff, subcontractors and consumables. The going concern condition then applies differently by scheme: under the merged scheme it governs whether the payable amount is actually paid, with the payment reinstated if the company becomes a going concern again on or before the amendment deadline, while under ERIS it bars the claim itself. Beyond those basics, details such as contracts, grants and group structure shape which scheme applies and what the claim is worth.

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Effectively, yes. R&D relief runs through the corporation tax system, so it reaches only entities within the charge to UK corporation tax; a sole trader or an ordinary partnership pays income tax and has no equivalent to claim. An LLP cannot claim in its own right, but relief can still find its way to a corporate member, through the way that member’s own corporation tax computation picks up its slice of the partnership profits — so long as the R&D relates to a trade the partnership carries on, or will carry on. One limit applies whichever scheme is in point, not only to old periods: HMRC reads the partnership computation rule as doing nothing beyond fixing the corporate member’s profit, so the benefit lands as reduced profits and no payable cash credit can be claimed on it.

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No. The minimum expenditure requirement was removed for accounting periods ending on or after 1 April 2012, precisely so that small companies and start-ups were not shut out. A small claim still carries the same compliance obligations as a large one, including claim notification for first-time claimants and the Additional Information Form, so the practical question is whether the benefit justifies preparing the claim properly. We will tell you honestly if it does not.

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Yes — the test looks at what the work set out to resolve, not at whether it got there. The Guidelines are explicit that R&D still happens even where the advance is never achieved, and dead ends often make the strongest case that the uncertainty was real: a problem a competent professional could settle readily does not defeat a team for months. Failure on its own qualifies nothing, though — a product that flopped commercially, or a build that stalled on ordinary engineering difficulty, counts only where the underlying work sought an advance in science or technology through uncertainty a competent professional in the field could not readily resolve. Write down what you tried, where existing knowledge ran out and what the work taught you; our guide to what actually qualifies marks where the line falls.

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Someone whose qualifications, practical experience, or both place them genuinely inside the project’s own field — competence is judged field by field, so a software architect is not one on a fermentation problem. Their job in a claim is to pin down the uncertainties and say why the answers were not readily available to a professional working in that field. Degrees are not a legal requirement, but HMRC looks for command of the underlying principles, awareness of where the field’s knowledge currently stands, and a genuine track record; an intelligent interest in a subject qualifies nobody. Identify yours before drafting starts, because the AIF is built around their judgement — and the full definition sets out the remaining tests.

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The SME thresholds (fewer than 500 staff, and either turnover of €100m or less or a balance sheet total of €86m or less) are tested across your wider group, not your company alone. A linked enterprise is one that controls you or that you control, typically through more than 50% of the voting rights; its headcount, turnover and assets are added to yours in full. A partner enterprise holds between 25% and 50%; you add its figures in proportion to the holding. Exceptions exist for certain venture capital firms, universities and institutional investors. Under the current schemes this matters chiefly for ERIS, which only SMEs can claim.

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Company size only changes for R&D purposes once the thresholds have been crossed in two consecutive years; in the first period you cross them, your existing status holds. The exception is ownership. Where the enterprise whose figures come in already exceeds the headcount limit or both financial limits on its own account, there is no grace year and SME status ends for that period — and a minority stake can be enough. Where the acquirer is itself an SME, a relief runs the other way and the target keeps SME status for that period; what happens if my company outgrows the SME definition sets out the full position. Under the current schemes, size matters chiefly for ERIS, which only loss-making, R&D-intensive SMEs can claim; the merged scheme applies to companies of every size at the same rate.

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Often, yes. For accounting periods beginning on or after 1 April 2024, the customer claims only where, when the contract was made, it intended or contemplated that R&D of that sort would be undertaken. Where it did not, because it bought an outcome and left the how to you, you can claim in your own right as the contractor. Contractors working for overseas customers, or for customers carrying on no trade within the charge to UK tax, can also claim in their own right. Contract wording usually decides the point, so review it before either side claims. Our guide to contracted-out R&D works through the scenarios.

Not in its own right. A partnership is not a company for corporation tax, so it cannot hold an R&D claim, and a limited liability partnership is in the same position because it is taxed as a partnership on its members. Where a member is a company within the charge to corporation tax, section 1259 CTA 2009 computes the firm’s trade profits as though a company carried on the trade, and R&D relief can reach that member through its profit share — provided the R&D relates to a trade the partnership carries on or intends to carry on. What does not follow is cash: HMRC’s stated view is that the payable tax credit cannot be claimed on relief reaching a corporate member this way. Our full answer sets out whether an LLP or partnership can claim R&D tax credits.

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Six categories: staff costs, apportioned to time spent on R&D; externally provided workers, such as agency staff; subcontracted R&D, which qualifies at 65% for unconnected subcontractors; consumables, meaning materials used up or transformed in the work plus an apportionment of water, fuel and power; software, data licences and cloud computing used in the R&D; and payments to clinical trial volunteers. Capital expenditure, rent and patent costs sit outside the relief, though capital spending on R&D can instead attract R&D allowances. The detail matters, particularly apportionment and the UK-only rules for subcontractors and external workers, so start with our qualifying costs guide.

Three things, broadly: licence fees for software the R&D actually used, licences to access someone else’s data, and cloud services — remote compute, storage and platforms — where the spend is directly attributable to the work. The test is what the tool was doing, not what it is: spend has to trace back to resolving the project’s scientific or technological uncertainty. That keeps the CRM, the finance system and the cluster running live customer traffic out of the claim, however necessary they are. Very little is used only on the R&D, so apportionment is most of the job — take the share on a basis you can justify, whether that is billing data, project tags or hours, and write down what that basis was. Our full cost list has the detail.

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Payments to unconnected subcontractors qualify at 65% of the portion attributable to R&D undertaken in the UK or within the narrow overseas exception, so a £10,000 invoice for qualifying UK R&D contributes £6,500 to the claim. Two conditions sit around that rate. First, for accounting periods beginning on or after 1 April 2024 the subcontracted work must be undertaken in the UK, unless it meets the narrow qualifying overseas expenditure exception. Second, you can only claim at all if your customer did not, when contracting, intend or contemplate that R&D of that sort would be undertaken: the contracted-out R&D rules decide who claims.

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Usually not, for accounting periods beginning on or after 1 April 2024. Subcontracted R&D must be undertaken in the UK, and externally provided workers’ earnings must attract UK PAYE and Class 1 NIC. Both restrictions share the same narrow exception, qualifying overseas expenditure: conditions necessary for the R&D (geographical, environmental, social or regulatory, such as clinical trial populations or a regulator’s requirements) that are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate here. Cost savings and workforce availability are expressly excluded as justifications. Our overseas R&D guide covers the planning implications.

Through your Corporation Tax return. The claim itself is made in the CT600, and the Additional Information Form must be submitted before or with it, covering project descriptions, cost breakdowns, the senior internal R&D contact and every agent involved. Preparation runs in two strands: establishing which projects meet the qualifying R&D definition, and calculating the qualifying costs. We are registered with HMRC as tax agents and prefer to handle the whole sequence ourselves, submitting the return that contains the claim, or amending it if it has already been filed, so nothing reaches HMRC out of order.

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How long preparation takes depends on the claim and on the state of your records; once the information is gathered from your team, a few weeks is common, and there is no standard answer worth quoting. Once submitted, HMRC’s processing time varies with the complexity of the claim, the quality of the supporting information and the volume of claims in the queue — and nobody outside HMRC controls that queue, so treat a promised payment date from any adviser with suspicion. If HMRC opens a compliance check, payment is withheld until it is resolved, which is one reason preparation standards matter more than speed. We agree a realistic timeline at the start and keep you informed throughout; HMRC’s own published aims are set out in how long it takes to receive the payment.

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Only lightly. We are registered with HMRC as tax agents, so we prepare the claim, the calculation and the Additional Information Form, and we prefer to submit the corporation tax return containing the claim ourselves, or amend it if it has already been filed. From your accountant we typically need copies of the return, the accounts and payroll records; their day-to-day role and the client relationship stay theirs, and many of our clients arrive through their accountant. If you are an accountant considering a referral, our working with accountants page explains the arrangement. The fuller comparison, including when your accountant is the right answer, is at specialist or accountant: who should prepare the claim?

There is no statutory format. HMRC accepts that some R&D costs will be an estimated proportion of known expenditure — staff time, for example — provided the estimate is arrived at using evidence and reason; that latitude applies to any claim, not just a first one. Still, keep records as you go: timesheets or staff allocation records, project documents describing the scientific or technological uncertainties, subcontractor and externally provided worker agreements, and test results. Good records make the next claim faster to prepare and far easier to defend if HMRC opens an enquiry, because the evidence exists from the time the work was done.

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Generally two years from the end of the period of account. That means the last standard deadlines for claims under the old SME and RDEC schemes fall in late March 2027, and the deadlines roll shut year end by year end — several have already passed. Two cautions. First, the claim notification requirement can invalidate a backdated claim where the six-month notification window was missed, even though the amendment deadline is open. Second, extended or shortened periods of account complicate the dates, so check yours rather than assuming. Our backdated claims guide shows how to work out your own runway.

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Probably — the requirement catches first-time claimants, and anyone who has not claimed within the three years ending with the notification deadline. It bites on accounting periods that begin on or after 1 April 2023. The deadline is the last day of the six months beginning with the day after the period of account ends. A company the rule catches must either notify HMRC or make the claim itself by that date. There is no late route: a claim made afterwards without a notification is invalid even though the return could still be amended. The trap for established claimants is that a pre-April 2023 period claimed by an amendment filed on or after 1 April 2023 does not count as a prior claim. Test your own dates with the deadline checker, or work through examples by year end in the full guide.

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HMRC rejects the claim. The AIF has been mandatory for claims made on or after 1 August 2023 — in practice 8 August 2023 — and must be submitted before or with the CT600 containing the claim; a claim filed without it is treated as invalid and no relief is processed until a compliant form is in. The AIF requires project descriptions, cost breakdowns, the senior internal R&D contact and every agent involved in the claim. A thin or inaccurate AIF also raises enquiry risk, because it is the first thing HMRC reads. Our AIF guide explains what a well-prepared form contains.

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Common enough that you should plan for it. In 2023-24, the most recent year HMRC has published, roughly one claim in six drew a compliance check — 17%, up from 10% a year earlier — handled by a team HMRC puts above 500 people. The scrutiny is working, so it is unlikely to ease: HMRC’s July 2026 annual report puts error and fraud at 6.4% for 2023-24 on random-enquiry evidence, down from 17.6% in 2021-22. Being checked is not an accusation; it is a request to evidence what you filed, and how well the claim was built in the first place is usually what settles it. See how likely an HMRC enquiry is. If a check has already arrived, HMRC enquiry defence is the standalone engagement that covers it.

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Both are possible. HMRC can hold a payable credit back while it checks a claim, and it can come back afterwards: for twelve months from delivery of the return it may open an enquiry as of right, with no new information needed to justify it. Once that window shuts HMRC can still assess by discovery, but only where the loss of tax was brought about carelessly or deliberately, or where its officer could not reasonably have known of the excess from what the return and the claim disclosed — and then up to four years after the period ends, six where the error was careless, twenty where it was deliberate. An overclaim is then recovered as if it were unpaid tax, with late-payment interest on top; a penalty arises only where the error was careless or deliberate, which is what makes reasonable care worth paying for. We prepare on the assumption that a claim will be read critically rather than waved through.

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Penalties scale with behaviour. Where you can show reasonable care was taken, no penalty arises at all. A careless error can attract a penalty of up to 30%, reducible to nil where you disclose it unprompted. A deliberate error that was concealed can attract a penalty of up to 100% of the amount overclaimed, on top of repaying the relief itself. Cooperation counts: prompt disclosure and constructive engagement with HMRC reduce the percentage. The dependable way to avoid penalties is to be able to show the claim was prepared with care, on evidence, by people who understood the legislation. That record is what a regulated chartered adviser builds into a claim from the start; see how to respond to an HMRC enquiry.

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An enquiry asks you to prove what you filed. Expect HMRC to want a technical account from the competent professional behind each project, workings that build the cost figure up rather than state it, something showing who worked on the R&D and for how long, the contracts sitting behind any subcontracted work, and whatever the project generated while it was running — notes, plans, test results. Material written while the work was happening carries far more weight than anything assembled once the letter arrives, so we gather it during preparation rather than after. On claims we prepare, enquiry support is included as standard, and we also take on enquiries into claims another adviser filed.

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Sometimes, though less often and less completely than the name suggests. Advance assurance on a full claim is the meaningful version and the most restricted: an SME making its very first claim can have HMRC agree the claim as a whole, covering up to three accounting periods. The 2026 targeted route, open since May, admits SMEs that have claimed before, but only puts up to two defined areas of a claim to HMRC; the separate online qualification checker is not assurance at all and binds nobody. None of it removes the need to get the claim right, because assurance addresses whether the projects qualify — not your cost figures, and not compliance steps such as notifying HMRC first.

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No. HMRC operates a process now, check later approach: most claims are paid when they are filed, and questions come afterwards if they come at all. Payment tells you the claim was processed, not that it was checked or approved, and an enquiry can arrive well after the money has been received and spent; how likely an HMRC enquiry is sets out the current check rate. HMRC says as much itself: its published account of its approach to R&D reliefs records that it opens some compliance checks after payment, which gets money to companies quickly but leaves open the possibility that a claim is later found non-compliant and the payment recovered. If the claim contained errors, relief can be repaid with interest, and in some cases with penalties, years later. If your claims have always been paid without questions and you have never had an independent view of them, our free claim review is a confidential way to find out where you actually stand.

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Yes, if they deal with HMRC for you. The Finance Act 2026 requirement began taking effect in stages on 18 August 2026, and filing an Additional Information Form or an amended return is squarely inside it. Established firms holding an Agent Services Account are registered automatically, without applying. What you cannot do is check: there is no public register, and the only details HMRC publishes are of advisers it has penalised, banned or refused to deal with. Ask the company that will sign your engagement letter, and rely on the checks that produce evidence — the professional bodies’ registers and AML supervision. The full answer covers the dates, the automatic-registration rule and the gaps.

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