Research and Development (R&D) tax reliefs

Guide

Research and Development (R&D) tax reliefs help UK businesses working on innovative projects in science and technology.

If your project qualifies as R&D for tax purposes, you can claim Corporation Tax relief.

Projects that qualify as R&D

To qualify for R&D tax relief, the work must be part of a specific project to make an advance in science or technology. You cannot claim if the advance is in:

the arts
humanities
social sciences, including economics

The project must relate to your company's trade, either an existing one, or one that you intend to start up based on the results of the R&D.

To claim, you need to explain how a project:

looked for an advance in the field
had to overcome the scientific or technological uncertainty
tried to overcome the scientific or technological uncertainty
could not be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.

If you're uncertain whether your project qualifies for R&D tax relief, check:

Types of R&D tax relief - accounting periods beginning before 1 April 2024

There are two different types of R&D tax relief, depending on the size of your company and if the project has been subcontracted to you or is subsidised, or both.

Small and medium-sized enterprise (SME) R&D tax relief

You can claim SME R&D tax relief if you're an SME with both of the following:

less than 500 staff
a turnover of under 100 million euros or a balance sheet total under 86 million euros

You'll need to include partner and linked enterprises when you work out if you're an SME.

For qualifying expenditure incurred on or after 1 April 2023, you can claim the higher 14.5% tax credit rate if you meet the intensity condition with an R&D intensity of at least 40%.

R&D expenditure credit

Large companies can claim expenditure credit for working on R&D projects.

SMEs who have been subcontracted to do R&D work by a large company or have subsidised expenditure can also claim expenditure credit.

For accounting periods beginning on or after 1 April 2023, you may need to tell HM Revenue & Customs (HMRC) if you plan to claim R&D tax relief or expenditure credit.

Types of R&D tax relief - accounting periods beginning on or after 1 April 2024

For periods beginning on or after 1 April 2024, there is one merged scheme for all companies. There is also an additional scheme with a more generous basis of calculation for only loss-making R&D intensive SMEs.

The expenditure rules are the same for both forms of relief, but the calculation is different.

Where work is done under contract, the party that initiated the R&D project is generally the party that can claim.

Merged scheme for R&D expenditure credit (RDEC)

Any size of company doing qualifying R&D can claim under the merged scheme.

Enhanced R&D intensive support (ERIS)

Enhanced R&D intensive support is calculated in the same way as the SME scheme before 1 April 2024. You can claim ERIS if:

you're a SME with:
- less than 500 staff
- a turnover of under 100 million euros or a balance sheet total under 86 million euros
you make a trading loss for tax purposes before relief is calculated
you meet the R&D intensity condition, with an R&D intensity of at least 30%

The same expenditure rules apply as for the merged scheme.

For more information, see R&D tax relief: the merged scheme and enhanced R&D intensive support.

R&D-intensive support for loss-making SMEs in Northern Ireland

Specific provisions are in place for certain loss-making Northern Ireland-based SMEs engaged in R&D-intensive activities, whose business activities involve no element of trade in goods, and no relevant activities in relation to electricity.

Find out more on R&D tax relief: Enhanced R&D intensive support for loss-making SMEs based in Northern Ireland.

Before you claim

You must follow these steps before you claim either R&D tax relief or expenditure credit in the Company Tax Return, or your claim may not be valid.

For accounting periods beginning on or after 1 April 2023, check if you need to submit a claim notification form to notify HMRC in advance of your claim. Find out what you need to provide when you tell HMRC that you're planning to claim R&D tax relief.
From 8 August 2023, you must submit an additional information form to support your claim. Find out what information you need to submit, when and how to submit it.

For further information, see HMRC's collection of guides on R&D tax relief.