How R&D Tax Credits Work for UK Businesses

Specialist R&D Tax Credit Claims with Full HMRC Compliance

R&D tax credits are a UK government incentive that allows eligible companies to reduce their Corporation Tax or claim a payable cash credit when they carry out qualifying research and development.

The relief applies where a business seeks to resolve scientific or technological uncertainty as part of its trade, even if the project is not commercially successful.

We specialise exclusively in preparing and supporting R&D tax credit claims for UK companies, ensuring claims are accurate, defensible, and fully aligned with HMRC guidance.

Speak to an R&D tax credit specialist today.

What Are R&D Tax Credits?

R&D tax credits are provided by HMRC to encourage UK companies to invest in innovation. They allow companies to recover a proportion of their qualifying R&D costs as either a tax reduction or a cash repayment.

The definition of R&D for tax purposes is narrow and technical. It does not focus on creativity or product launches, but on whether a company has attempted to overcome scientific or technological uncertainty that could not easily be resolved by a competent professional.

What are R&D tax credits in the UK?

R&D tax credits in the UK are a Corporation Tax relief that rewards companies for carrying out qualifying research and development activities.

Eligible companies can reduce their tax bill or receive a cash payment when their work seeks to achieve an advance in science or technology and involves genuine uncertainty.

What Activities Qualify as R&D for Tax Purpose

For HMRC purposes, R&D activity must meet all of the following conditions:

The project aims to achieve an advance in science or technology
There is scientific or technological uncertainty at the outset
The work is carried out systematically by competent professionals
The solution is not readily deducible from existing knowledge

R&D is not limited to laboratories or new inventions. Many valid claims arise from day-to-day commercial projects where standard methods fail and new technical solutions must be developed.

Who Can Claim R&D Tax Credits?

UK limited companies subject to Corporation Tax may be eligible to claim R&D tax credits, regardless of size or sector.

Eligibility depends on the nature of the work undertaken, not turnover, profit, or whether the business considers itself “innovative”.

We regularly support claims from:

Software and SaaS companies
Engineering and manufacturing firms
Construction and property development businesses
Fintech and financial services companies
Technology-led professional services

Can small businesses claim R&D tax credits?

Yes. Small and medium-sized enterprises frequently qualify for R&D tax credits.

Many successful claims come from SMEs working on software development, automation, system integration, or process improvement where technological uncertainty exists.

Do failed R&D projects qualify?

Yes. Failed or abandoned R&D projects can still qualify for tax relief.

HMRC does not require commercial success. As long as genuine scientific or technological uncertainty existed and systematic work was undertaken to resolve it, the costs may still qualify.

How far back can you claim R&D tax credits?

Companies can usually claim R&D tax credits for the last two completed accounting periods, provided qualifying R&D costs were incurred during those periods.

What R&D Costs Can Be Claimed?

Only costs that are directly attributable to qualifying R&D activity may be included.

Common qualifying cost categories include:

Staffing costs (salaries, employer NIC, pension contributions)
Software licences used in R&D
Cloud computing and data costs
Consumable items and transformed materials
Subcontractor costs (subject to HMRC limits)
Externally provided workers

Accurate cost apportionment is critical. Over-claiming or miscategorisation increases the risk of HMRC enquiries.

How Do You Claim R&D Tax Credits?

The R&D tax credit claim process typically involves the following steps:

Identify qualifying R&D projects
Prepare a technical explanation addressing uncertainty
Calculate qualifying expenditure
Submit the claim through the Corporation Tax return
Respond to HMRC queries if required

A well-prepared claim reduces delays, enquiries, and settlement risk.

Our Approach to R&D Tax Credit Claims

Preparing an R&D tax credit claim is not an accounting exercise alone. It is a technical narrative that must clearly demonstrate why the work meets HMRC’s definition of R&D.

Our process focuses on:

Isolating genuine technological uncertainty
Translating technical challenges into HMRC-aligned language
Excluding non-qualifying activity to protect claim integrity
Preparing defensible documentation from the outset

We do not submit aggressive or artificial claims. Every submission is built to withstand scrutiny.

R&D Tax Credits Across Different Industries

While the rules remain consistent, qualifying R&D looks different across sectors.

Software development often qualifies where new algorithms, architectures, or integrations are required
Engineering and construction claims arise from site-specific challenges or novel technical solutions
Manufacturing claims frequently involve prototyping, automation, and process optimisation
Fintech claims stem from security, scalability, and complex data processing challenges

R&D is about uncertainty, not job titles or industry labels.

Is R&D Tax Relief the Same as R&D Tax Credits?

R&D tax relief and R&D tax credits are commonly used terms that refer to the same HMRC incentive.

The relief is delivered either as a reduction in Corporation Tax or as a payable cash credit, depending on the company’s financial position and claim structure.

Why Choose Us?

Focused exclusively on R&D tax credit claims
Strong track record with HMRC-compliant submissions
Technical and financial understanding combined
Clear, structured, and defensible claims
Ongoing support through HMRC enquiries

Our priority is accuracy, compliance, and protecting your business.

Speak to an R&D Tax Credit Specialist

If you believe your company may be carrying out qualifying R&D activity, speak with us for an initial assessment.

There is no obligation, and we will clearly explain whether a claim is viable before proceeding.

Book a call with an R&D tax credit advisor today.

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