Medical device development is dense with qualifying R&D, from first prototype through verification testing to clinical evaluation. A profitable medtech keeps 15p per £1 of qualifying spend under the merged scheme; a loss-making, R&D-intensive one can receive up to 26.97p per £1 in cash under ERIS. The judgement a medtech claim turns on is scope. Development work that resolves technological uncertainty qualifies; routine regulatory compliance does not; and the two run side by side through the life of a device programme.
What counts as qualifying R&D in medtech?
Work seeking an advance in the field of science or technology by resolving uncertainty a competent professional could not readily resolve. In device development that test is met constantly. Concept-level examples:
- integrating sensing, processing and power into a form factor the body will tolerate, where the constraints defeat known architectures
- developing materials, coatings or adhesives that hold their properties and biocompatibility through repeated sterilisation cycles
- software as a medical device, where the accuracy and reliability the clinical application demands cannot be achieved by applying established techniques
- moving from a working prototype to manufacture at scale, where tolerances and processes proven on the bench do not transfer
The advance must be to the field’s knowledge or capability, not just your company’s. Reproducing what a competitor already sells, even from scratch, needs careful analysis before it goes in a claim. The full test, and the documentation HMRC expects, is set out in what counts as qualifying R&D.
Does regulatory work qualify?
Some of it, and the dividing line is uncertainty. Verification and validation testing that feeds design iteration is often part of resolving technological uncertainty: the device fails a test, the design changes, the cycle repeats. That loop can qualify. Compiling technical documentation, quality management paperwork and routine conformity assessment is not R&D, however demanding it is.
Clinical evaluation sits on the qualifying side more often than founders expect. Where a clinical investigation is resolving genuine uncertainty about a device’s performance or safety, it is qualifying activity, and payments to volunteers in clinical trials are a qualifying cost category in their own right. Overseas investigations qualify only under a narrow exception, for instance where a regulator requires in-territory studies or the UK cannot supply the participant population. Both angles are covered in clinical trial costs in R&D claims.
Scoping this boundary honestly protects the claim: HMRC currently checks roughly one in six, and claims that sweep whole regulatory budgets into qualifying costs are the sort that fail.
How do prototypes enter the claim?
Through the normal cost categories. Staff time on design, build and testing is claimed by apportionment; materials consumed in building and testing prototypes are claimable as consumables; software, data and cloud costs used in the R&D follow their own category. The rules, category by category, are in which costs qualify for R&D tax relief.
Two structural points are worth knowing early. Where prototype work is contracted to an unconnected design house, the payments enter the claim at 65%, and generally only where the work is undertaken in the UK. And prototype iterations carry evidential weight: a version history that records what failed, what changed and why is exactly the record of systematic investigation an enquiry asks for. Keep it as you go; it is expensive to reconstruct.
Will a medtech claim under ERIS or the merged scheme?
It depends on profitability and intensity. A pre-revenue device company whose relevant R&D expenditure is at least 30% of its total relevant expenditure claims under Enhanced R&D Intensive Support (ERIS): on the standard example, £100,000 of qualifying spend with sufficient losses returns £100,000 x 186% x 14.5% = £26,970 in cash. A one-year grace period protects companies whose intensity dips below 30% after a qualifying year, and connected companies count on both sides of the ratio. The intensity arithmetic for a typical pre-revenue profile is worked through in ERIS for pre-revenue biotech and medtech.
A profitable medtech claims the merged scheme: a 20% taxable credit, worth £15,000 net per £100,000 of qualifying spend at the 25% corporation tax rate, or £16,200 at 19%. Run your own figures through the claim value calculator and the ERIS intensity calculator.
Do grants affect a medtech R&D claim?
No, not under the current schemes. For accounting periods beginning on or after 1 April 2024, grant funding, including Innovate UK, no longer blocks or reduces relief, because the old subsidised-expenditure rules were abolished and neither current scheme is notified state aid. Device companies that were told years ago to keep grants and R&D claims apart should revisit that advice: the position has changed. The detail is in grant funding and R&D tax relief.
A note on the Welsh medtech cluster
LimestoneGrey works from Cardiff, alongside a Welsh medtech community that has grown around organisations such as Life Sciences Hub Wales, which exists to connect industry with health and social care bodies and research organisations. We are members of MediWales, the Welsh life science network, and we serve medtech companies across the whole of the UK, well beyond Wales.
Why medtech companies work with LimestoneGrey
We are a firm of chartered tax advisers and chartered accountants specialising in R&D tax relief: the practice is led by a dual-qualified chartered accountant and chartered tax adviser, every claim is signed off by a chartered adviser, and the firm is regulated by ICAEW and registered with HMRC as a tax adviser. Enquiry support is included as standard in every engagement: see what to expect from an HMRC enquiry.
“Having LimestoneGrey’s expertise to guide us through each step made a huge difference. The process was explained clearly and handled with professionalism, ensuring everything met the required legislative standards. We’ve built a genuine partnership with LimestoneGrey and value their ongoing advice and shared commitment to innovation.”
Med-Tech client
Medtech sits within our wider life sciences practice. If you are unsure where the qualifying boundary falls in your device programme, or which scheme your next period lands in, contact us: we will map it with you and agree the fee before any work starts. And if another adviser already prepares your R&D claims, our free claim review is a confidential second opinion on your most recent submission.
Written by Matthew Jones ACA CTA. Last reviewed July 2026.