R&D Tax Relief
Supporting businesses that are taking commercial risks to advance industry knowledge, products, processes and services.
Tax Status
A limited company within the charge of UK Corporation Tax.
Understanding R&D Tax Relief
R&D tax relief is a UK government incentive that rewards limited companies for investing in innovation. It returns a portion of qualifying R&D costs as a Corporation Tax benefit, encouraging businesses to keep developing new products, services and processes.
Two schemes currently apply, depending on a company’s size and profitability:
Merged R&D Expenditure Credit (RDEC)
20%
Taxable benefit for UK companies with qualifying R&D projects.
Enhanced R&D Intensive Support (ERIS)
27%
Payable tax credit for R&D-intensive loss-making SMEs that spent 30% or more of their total expenditure on R&D, for accounting periods beginning on or after 1 April 2024.
R&D Tax Relief Eligibility
Eligible Companies
To be eligible for R&D tax relief, the claimant company is:
Sector
In the manufacturing, engineering, technology, software or life science sectors (although most claims come from these sectors, eligibility depends on the activity carried out, not the industry, so that other sectors can qualify too).
Resource Commitment
Has committed time and financial resources into a qualifying R&D project.
Eligible Projects and Activities
To be eligible, an R&D project must have fulfilled the following criteria:
Sought an Advance in Science or Technology by
- Attempting to create a new process, material, device, product or service.
- Or attempting to appreciably improve an existing process, material, device, product or service.
Faced a Scientific or Technological Uncertainty
Faced a scientific or technological uncertainty that a competent professional in the field could not readily resolve at the outset, even after reviewing all available evidence, and involved research, testing and analysis to resolve it.
Advances Knowledge in the Field
Advanced knowledge or capability in a science or technology field as a whole, not just the company – even if the project failed.
Qualifying R&D Activity in a Product Life Cycle
R&D tax reliefs support innovation projects from the start of a project through to the resolution of its scientific or technological uncertainty. Below is an example of where, in a product’s life-cycle, qualifying R&D activity can occur.
Non-Qualifying
Commercial/Scientific Idea
Market/Feasibility Research
Qualifying R&D
Establishing technological or scientific uncertainty
The process of resolving the technological or scientific uncertainty
Prototyping
Non-Qualifying
Patents or other IP protection sought
Pre-production design
Industrial upscaling
Qualifying R&D Costs
There are five pillars of qualifying R&D costs you can claim for within the “uncertainty” phase of an innovation project.
Subcontractor Costs and Overseas Restrictions
Subcontractor Costs
Whichever party decides to undertake the R&D can claim the relief. You can claim 65% of an R&D payment made to an unconnected contractor, or up to 100% for a connected contractor..
From accounting periods beginning on or after 1 April 2024, all claimants’ (except NI-registered companies claiming ERIS) contracted R&D activities must now be undertaken in the UK, plus the company or staff controller of any R&D-related EPWs is required to apply PAYE and NICs for that worker.
Software, Data and Cloud Computing Costs
Software
Software expenditure that was directly involved in the R&D project. You can also claim for a proportion of software that was only partly used in innovation activities.
Data & Cloud Computing
For accounting periods beginning on or after 1 April 2023, you will be able to claim for Data & Cloud Computing Costs directly involved with the R&D project that fall into the following categories:
- Data storage
- Hardware facilities
- Operating systems
- Software platforms
- Purchase costs of data sets
Staff and EPW Costs
Under the R&D tax relief incentive, you can claim the following costs for staff or externally paid workers (EPWs) who were directly involved in an R&D project (they had “hands-on” input) and some managerial time:
- Salaries
- Wages
- National Insurance Contributions
- Pension Contributions
Consumable Costs
Materials and hardware that are directly consumed during the R&D project.
This includes chemicals, ingredients and electrical components.
These materials and their outputs must not be commercially viable.
Utility Costs
Power, water and fuel that are directly used in an R&D project.
Calculating the proportion of utility costs used in an R&D project can be difficult, but the Amplifi team can advise you on the best practices.
R&D Tax Relief FAQs
What information does the R&D tax relief claim notification form require?
Businesses making R&D tax relief claims for expenditure during accounting periods beginning on or after 1 April 2023 must now notify HMRC in advance of their intention to submit a claim.
Who Does It Affect?
- First-time claimants
- If a business has not submitted a claim within the last 3 years (The 3 years can be calculated by taking 6 months from the end of the accounting period and counting back 3 years).
Requirements of the Pre-Claim Notification
The claim notification form can be completed by either a company representative or an agent acting on the company’s behalf and will require:
- Unique Taxpayer Reference
- Name and contact details of the senior internal R&D contact within the company
- Accounting period start and end date that is being claimed for
- Period of account start and end date
- Summary of the high-level planned activities
- Details of any agent involved in the R&D claim
Timeline to Submit The Pre-Claim Notification
The advance notification must be submitted within 6 months of the end of the period of account for which the claim is being made.
What is the Additional Information Form (AIF) for R&D tax relief claims?
The R&D tax relief additional information form is a required document that businesses must submit to HMRC to support their claims for Research and Development (R&D) tax relief or expenditure credit. This form provides detailed information about the R&D activities, associated costs and supporting evidence for each accounting period.
Mandatory Submission
Introduced as a mandatory process for claims made on or after 8 August 2023, the Additional Information Form (AIF) must be submitted for each accounting period before or on the same day as your Company Tax Return. Without it, your claim will be invalid.
What Details Are Required
- Company details, including the UTR, PAYE, VAT number and SIC code
- Name and contact details of the senior internal R&D contact within the company
- Accounting period start and end date that is being claimed for
- Details of any agent involved with the R&D claim
- Qualifying direct and indirect expenditure details by cost category
- Details of projects being claimed for and total qualifying expenditure per project
- Loss-making R&D intensive SMEs need to include total relevant expenditure details
Who Can Submit An AIF
The claimant or an agent acting on behalf of the company can complete and submit the AIF.
What financial documents are required for an R&D tax relief claim?
To perform an in-depth analysis of a project’s relevant R&D expenditure (i.e. staff and Externally Provided Workers (EPW), subcontractors, consumables, utilities, software, data and cloud computing costs) and create a report with a full audit trail, our R&D specialists will analyse the following financial documentation:
- Payroll
- Nominal ledger transactions
- Grant information
- Copy of the statutory accounts
- Copy of the CT600
- Copy of the tax computation
How do grants affect an R&D tax relief claim?
You can claim both grants and R&D tax reliefs, however, numerous factors determine what you can and cannot claim, so it is best to consult an expert who can assess your specific innovation and its unique circumstances.
What does an R&D tax relief technical narrative include?
To tackle abuse and fraudulent R&D tax relief claims, the government has introduced a new cross-cutting team and is requiring more detailed claims.
Therefore, the technical narrative must fully justify the expenditure outlined in the financial report.
Our industry-experienced technical consultants will interview the competent professional and other key members of the R&D team and produce a comprehensive technical narrative, which will include key information such as:
- Background of the company
- Project aim/context
- Competent professional and key people who worked on the project
- Advancement being sought
- Scientific and technological uncertainties
- How they attempted to resolve them
What is the accountant’s role in an R&D tax relief claim?
In our process, the accountant is only required to:
- Possibly, share relevant financial information with our team.
- Submit the completed claim to the HMRC and make the necessary CT600 amendments (all the information for these steps will be provided by Amplifi).
How do I claim R&D tax relief?
We recommend working with a specialist R&D tax relief provider (like Amplifi) to complete an R&D tax relief claim.
Our experienced team of qualified accountants, chartered tax advisers, client account managers and industry-experienced technical consultants will compile a comprehensive claim and support it in the event of an HMRC enquiry.
When will I receive my R&D tax relief benefit?
Offsets will be taken off the tax bill when it is due.
Cash payments are estimated at 40 – 60 days, but this does depend on the HMRC workload.
Why would HMRC open an enquiry into an R&D tax relief claim?
The R&D tax relief incentive is currently undergoing a number of reforms, one of which is improving compliance and tackling abuse (£469 million was lost in 2021/22 alone to fraudulent claims and error).
Subsequently, a number of new measures have been introduced – including a significant expansion of HMRC’s R&D compliance team, which has grown from around 100 people between 2020 to 2021 to over 500 in 2026, and a requirement for more detail in claims – but these changes have also resulted in a rise in enquiries.
Some of the main reasons an R&D tax relief claim may undergo an enquiry include:
- Limited evidence to support the baseline
- No supporting information
- Disparities in the financial information or technical narrative
- Lack of qualifying proof
- Random selection
To help project your claim, work with an R&D tax relief adviser, like Amplifi.
We perform in-depth financial analysis of your R&D expenditure, create well-evidenced technical narratives that justify your spend and we will support you during any HMRC enquiry.
Why Choose Amplifi?
Over a Decade of Experience
We have been supporting innovative businesses across the UK with the R&D tax relief schemes for more than 10 years.
Specialist Expertise
Our team consists of qualified accountants, chartered tax advisers and technical consultants who have real-world expertise in sectors ranging from engineering and software to life sciences.
Meet Team Amplifi
Comprehensive and Diligent Service
From assessment to robust documentation and enquiry support (if required) every stage is delivered with accuracy, integrity and the highest evidence based detail.