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 loss-making SMEs that spend at least 30% of their total expenditure on R&D. 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 produces 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. The claim value calculator gives an estimate on your numbers, and the merged scheme guide shows the full workings.

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 protects companies whose intensity dips below 30% after a qualifying year. See the full ERIS guide, or test your ratio with the ERIS intensity calculator.

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.

No. For accounting periods beginning on or after 1 April 2024, grant funding, including Innovate UK awards, does not block or reduce relief under either the merged scheme or ERIS. The old subsidised-expenditure rules were abolished, and neither current scheme is notified state aid. Much of the guidance still published online describes the old SME rules, under which grants did push spend into a lower-value scheme; those rules now matter only for backdated claims covering earlier periods. Our guide to grant funding and R&D tax relief sets out the current position in full.

The PAYE cap limits the payable credit a company can receive in a period to £20,000 plus 300% of its relevant PAYE and NIC. It applies to cash credits under both the merged scheme and ERIS, and it bites hardest on companies with small payrolls that subcontract most of their R&D. An exemption applies where the company is creating or managing intellectual property and spends little with connected parties on subcontracted R&D or externally provided workers. If your headcount is low and your claim is large, check the cap before building the credit into a cash forecast.

Yes, for accounting periods that began before 1 April 2024, provided the amendment window is still open. Returns can generally be amended for roughly two years from the end of the accounting period, so the final standard deadline for old-scheme claims falls around 30 or 31 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. It must be 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. It must have spent money in the qualifying cost categories, such as staff, subcontractors and consumables. And it must be a going concern when the claim is made, not in administration or liquidation. Beyond those basics, details such as contracts, grants and group structure shape which scheme applies and what the claim is worth.

The relief is only available to entities chargeable to UK corporation tax, which in practice means companies. Sole traders pay income tax, not corporation tax, so they cannot claim. An LLP normally cannot claim in its own right either, but there is one route in: where a member of the LLP is a company, that corporate partner is chargeable to corporation tax on its share of the partnership profits and may be able to claim for R&D undertaken by the partnership, in proportion to its profit share.

No. The minimum expenditure requirement was removed on 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.

Yes. The relief rewards the attempt to resolve scientific or technological uncertainty, not the outcome. A project that never reached a working result can still qualify, and failed iterations are often the clearest evidence that the uncertainty was genuine: if a competent professional could have resolved the problem readily, the work would not have failed. What matters is documenting what was attempted, why existing knowledge was insufficient and what was learned. Our guide to what counts as qualifying R&D explains the definition in full.

A competent professional is someone with relevant qualifications or experience, or both, in the specific field of science or technology the project sits in. Their role in a claim is to identify the scientific or technological uncertainties and explain why a professional working in the field could not readily resolve them. Formal academic qualifications are not a strict legal requirement, but they carry real weight: HMRC gives more credence to a professional whose qualifications and track record demonstrate expertise in the field, and a claim is easier to defend when those credentials are strong. What ultimately counts is demonstrable expertise and practical experience in the relevant area of development. The Additional Information Form asks about the professionals behind each project, so identify yours early. More in what counts as qualifying R&D.

The SME thresholds (fewer than 500 staff, and either turnover under €100m or a balance sheet under €86m) 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.

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 acquisition: an SME bought by a large group loses SME status immediately, without the usual grace period. Under the current schemes, size matters chiefly for ERIS, which only loss-making SMEs can claim; the merged scheme applies to companies of every size at the same rate.

Often, yes. For accounting periods beginning on or after 1 April 2024, the customer claims only where it intended or contemplated the specific R&D when the contract was made. 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 outside UK corporation 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.

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 light, heat and water; 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. The detail matters, particularly apportionment and the UK-only rules for subcontractors and external workers, so start with our qualifying costs guide.

Software licences used for R&D work, cloud computing services such as data processing, hosting and storage directly attributable to R&D, data licences, and platform costs for testing, modelling, simulation or data analysis. The cost must relate to resolving the scientific or technological uncertainty: general business software, CRM systems and standard commercial hosting do not qualify. Where a licence or cloud service is used partly for R&D and partly for the rest of the business, apportion it on a justifiable basis and keep a note of how. More detail in our qualifying costs guide.

Payments to unconnected subcontractors qualify at 65%, so a £10,000 invoice for qualifying 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 the R&D was not contracted to you in terms that give your customer the claim: the contracted-out R&D rules decide who claims.

Usually not, for accounting periods beginning on or after 1 April 2024. Subcontractor payments qualify only where the R&D is undertaken in the UK, and externally provided workers only where they are subject to UK PAYE and Class 1 NIC. The exception is qualifying overseas expenditure: where conditions necessary for the R&D (geographical, environmental, social or regulatory, such as clinical trial populations or a regulator’s requirements) are not present in the UK and cannot reasonably be replicated 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.

Preparation typically takes four to six weeks, driven mainly by how quickly the information can be gathered from your team; claims can move faster where records are good. 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. 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.

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.

There is no statutory format. For a first claim, HMRC accepts that detailed contemporaneous records may not exist, and justified estimates, for example of staff time, are acceptable. From then on, 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.

Generally two years from the end of the accounting period, which is the window for amending a corporation tax return. That means the final standard deadline for claims under the old SME and RDEC schemes falls around 30 or 31 March 2027. 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 accounting periods complicate the dates, so check yours rather than assuming. Our backdated claims guide shows how to work out your own runway.

You do if you are claiming for the first time, or have not claimed in the previous three years, for an accounting period beginning on or after 1 April 2023. The notification must reach HMRC within six months of the end of the period of account. Miss the window and the claim is invalid, even if the return amendment deadline is still open. One wrinkle catches people out: amendments filed after 1 April 2023 for earlier periods do not count as prior claims for this test. The claim notification guide includes examples by year end, and the deadline checker tests your dates.

HMRC rejects the claim. The AIF has been mandatory for every R&D claim since 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.

Far likelier than it used to be. HMRC checks roughly one in six R&D claims, backed by a compliance team of more than 500 staff. The wider environment has tightened too: HMRC’s figures show error and fraud falling from 17.6% in 2021-22 to 5.9% in 2024-25, and claim volumes fell 26% to 46,950 in 2023-24. An enquiry is not a verdict; it is a demand to evidence the claim, and the standard of the original preparation usually decides the outcome. Our enquiries guide explains the process and how we defend claims.

Yes to both. If HMRC opens an enquiry before paying, it can withhold the credit until the enquiry is resolved. HMRC can also enquire into a claim it has already paid, typically following a discovery of new information, and require some or all of the credit to be repaid if the claim proves wrong, potentially with penalties on top. This is why we prepare every claim on the assumption it will be examined.

Penalties scale with behaviour. A genuinely careless error, where you can show reasonable care was taken, can be reduced to nil. A deliberate error that was concealed can attract a penalty of up to 100% of the value of the claim, 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 we defend claims.

Typically: detailed technical explanations of each project, evidence of the scientific or technological uncertainties, a breakdown and calculation of the qualifying costs, evidence of staff roles and time allocation, subcontractor agreements, and contemporaneous project records. Enquiries move fastest when this material existed at submission rather than being reconstructed afterwards, which is why we assemble the technical and cost evidence as part of preparing the claim. If you are already facing an enquiry, including on a claim another adviser filed, we can take on the enquiry support.

In limited circumstances, and it helps to separate three different things. HMRC’s long-standing advance assurance scheme covers an eligible first-time SME claimant’s whole claim and, where agreed, applies to the company’s first three accounting periods. The voluntary Targeted Advance Assurance pilot, launched in spring 2026 following its announcement at the Autumn Budget 2025, is narrower: HMRC’s view on up to two named areas of a claim, open to companies that may have claimed before (proposals for mandatory clearances were rejected). And HMRC’s non-binding online R&D qualification checker, available since September 2025, tests a project against the definition but is not assurance and commits HMRC to nothing. None of these replaces getting the claim right: assurance looks at whether projects qualify, not at your cost calculations or at compliance steps such as claim notification. We can advise whether either assurance route fits your situation.

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. 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.