Research and Development (R&D) tax reliefs
Research and Development (R&D) tax relief supports companies that work on innovative projects in science and technology. You may be able to claim Corporation Tax relief if your project meets the standard definition of R&D.
Projects that count as R&D
The work that qualifies for R&D tax relief 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
- 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.
Types of R&D relief
There are two different types of R&D relief depending on the size of your business and if the project has been subcontracted to you or not.
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 will need to include partner and linked enterprises when you work out if you're an SME. Find out more about the SME R&D tax relief.
R&D expenditure credit (RDEC)
Large companies, and SMEs who have been subcontracted to do R&D work by a large company, can claim expenditure credit for working on R&D projects.
Find out more about claiming RDEC.
In November 2023, the UK government announced significant changes to its R&D tax credit system, including merging RDEC and R&D SME relief into a singular scheme.
This scheme will be effective for accounting periods beginning on or after 1 April 2024. See the latest information on the reform of the R&D tax relief system.
Claiming R&D tax relief
If you think your company might be eligible for R&D& tax relief, you should:
- tell HMRC that you're planning to claim R&D tax relief (for accounting periods beginning on or after 1 April 2023)
- submit detailed information before you claim R&D tax relief (from 8 August 2023)
You should also read the detailed HMRC guide on claiming R&D tax credits.
Keep in mind it is unlikely you will be eligible to claim if your activity:
- will not be recognised as a scientific or technological innovation
- has already been conducted or is currently being conducted elsewhere
You may have to pay a penalty if you make an ineligible claim.