Space companies are among the most natural R&D claimants there are. Building hardware and software that must survive launch and then work, unattended, in an environment you cannot fully test on Earth is close to a working definition of scientific or technological uncertainty. The claims themselves still need care: agency funding, contracted programmes and long pre-revenue phases all change how a claim should be prepared.
What counts as qualifying R&D in space technology?
Work that seeks an advance in the field through uncertainty a competent professional could not readily resolve. At concept level, that regularly includes:
- Platform and payload engineering where mass, power, thermal and radiation constraints interact, and published solutions do not transfer to your configuration.
- Propulsion development, from chemical and electric thruster work to novel propellant handling.
- Radiation-tolerant electronics and the qualification of commercial components for orbit.
- Ground segment and flight software resolving genuine uncertainty, such as autonomy, constellation management or downlink processing at unusual scale.
- In-orbit demonstration programmes, where iteration evidence is often strong by nature.
Routine integration of proven components, on its own, does not qualify. The boundary is the uncertainty, and how the project is documented decides how defensible the claim is.
Does agency or grant funding affect the claim?
Under the current schemes, no. The old subsidised-expenditure restriction is abolished: grant funding, including UK Space Agency and Innovate UK awards, no longer blocks or reduces relief under the merged scheme or ERIS. Much online guidance still repeats the old rule; our grants page corrects it.
Agency contracts need one more question asked: where work is delivered under contract, the contracted-out R&D rules decide whether the customer or the contractor claims. Contractors serving overseas or untaxed customers can claim in their own right, which matters for companies delivering into international programmes.
Which scheme fits a space company?
Many space businesses spend years pre-revenue with heavy engineering payrolls, which is exactly the profile ERIS exists for: a loss-making SME spending at least 30% of total expenditure on R&D can receive up to 26.97p per £1 of qualifying spend, so £100,000 of qualifying costs can produce a £26,970 payable credit. Profitable companies claim the merged scheme’s 20% credit, worth £15,000 to £16,200 net per £100,000. The ERIS intensity calculator gives a quick read on the 30% test, and which scheme applies works through the decision.
Sector points worth knowing
- Prototype and test hardware consumed in development, including units lost in test campaigns, can qualify as consumable costs where they are not sold on.
- Overseas testing and launch services need checking against the overseas restrictions: the exception for conditions that cannot be replicated in the UK is narrow, and cost alone is expressly excluded as a justification.
- 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 building for orbit, a short scoping call will give you a straight view on eligibility and scheme fit. Call 0330 223 4 223 or send us a message.
Written by Matthew Jones ACA CTA. Last reviewed July 2026.