Many UK businesses don't claim R&D tax credits they're entitled to. Discover if your business qualifies, how to claim, and maximize your innovation tax relief.
Total R&D tax relief claimed in 2023
UK companies claiming R&D tax credits
Average claim as % of R&D expenditure
R&D tax credits are a government incentive designed to encourage innovation in UK businesses. They allow companies to claim tax relief on qualifying research and development costs, either reducing their corporation tax bill or receiving a cash payment if loss-making.
The scheme is more accessible than many business owners realize. You don't need to be developing rocket science – if you're solving technical challenges or creating innovative solutions in your industry, you likely qualify.
R&D tax credits apply to a wide range of innovative activities across all industries
R&D tax credits aren't just for tech companies. Here are examples from various industries:
Salaries, wages, NIC, and pension contributions for employees working on R&D projects
Payments to external specialists conducting R&D on your behalf (65% of costs)
Raw materials, water, fuel, and power used directly in R&D activities
Software used directly in the R&D process
Cloud services and data storage costs for R&D activities
All UK companies (the default scheme since April 2024)
20% credit on qualifying R&D expenditure
Taxable above-the-line credit that reduces corporation tax liability
Loss-making SMEs spending a high proportion of costs on qualifying R&D
Enhanced deduction for qualifying R&D costs
Cash surrender rate 14.5% for eligible loss-making companies
Review your business activities over the past two years to identify projects that involved innovation or technical challenges.
Document all eligible R&D expenditure including staff costs, materials, subcontractors, and related expenses.
Create a detailed report explaining the technical challenges, uncertainties, and how you attempted to overcome them.
Include your R&D claim in your company's Corporation Tax return or amend previous returns within two years.
HMRC may request additional information. Most claims are processed within 28 days, though complex cases may take longer.
R&D tax credit claims can be complex. Working with a specialist accountant ensures you maximize your claim while maintaining compliance with HMRC requirements. The average professional fee is typically 15-25% of the tax credit received.