Cleantech and energy companies carry two features that shape their R&D claims: development cycles that run from laboratory to pilot plant over several loss-making years, and grant funding at almost every stage. Both are now well served by the current schemes, and both are still widely misunderstood because most online guidance describes rules that no longer exist.
What counts as qualifying R&D in cleantech and energy?
Work seeking an advance in the field through uncertainty a competent professional could not readily resolve. At concept level, that regularly includes:
- Energy storage development: cell chemistry, battery management, thermal behaviour and degradation under real duty cycles.
- Hydrogen production, storage and handling, including electrolyser efficiency and materials work.
- Grid and demand-side software resolving genuine uncertainty in forecasting, balancing or control at scale.
- Marine, wind and solar component engineering for environments where published performance data runs out.
- Scale-up from bench to pilot, where behaviour at volume cannot be reliably predicted from laboratory results. Scale-up qualifies while technological uncertainty persists; routine capacity expansion does not.
Does grant funding reduce the claim?
No. Under the merged scheme and ERIS, grant funding, including Innovate UK awards, no longer blocks or reduces relief. The old subsidised-expenditure rules are abolished, and neither current scheme is notified state aid. Advice built on the old SME rules costs cleantech companies real money: our grants page sets out the current position, and covers the old rules only for backdated claims.
Which scheme fits?
Pre-revenue developers with heavy engineering payrolls should start with ERIS: a loss-making SME spending at least 30% of its total expenditure on R&D can receive up to 26.97p per £1, so £100,000 of qualifying spend can produce a £26,970 payable credit. The intensity calculator checks the 30% test. Profitable companies claim the merged scheme’s 20% credit, worth £15,000 to £16,200 net per £100,000. If the position is unclear, which scheme applies works through it by accounting period and tax position.
Sector points worth knowing
- Pilot plant and demonstrator spend needs splitting carefully: revenue costs of resolving uncertainty can qualify, while capital expenditure sits outside the credit under separate rules. The boundary is worth getting right early, before the accounting treatment hardens.
- Materials, feedstocks and prototype components consumed in development can qualify as consumables where they are not sold on.
- Consortium projects raise the contracted-out question: who intended or contemplated the R&D decides who claims.
- First-time claimants must watch the claim notification deadline: six months from the end of the period of account.
Talk it through with a chartered adviser
If your company is engineering the energy transition, a short scoping call will give you a straight view on eligibility, scheme fit and the grant position. Call 0330 223 4 223 or send us a message.
Written by Matthew Jones ACA CTA. Last reviewed July 2026.