Research and Development (R&D) tax reliefs

Guide

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
  • 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.

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:

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.