Speak to our expert team today to find out more about R&D tax credits.

R&D tax relief is a Corporation Tax relief that may reduce your company’s tax bill or result in a payable tax credit.
Depending on the size and profitability of your company, and the accounting period for which you are claiming, you could receive a benefit of up to 27% of your qualifying R&D expenditure across relevant projects. This relief can help fund future innovation, reducing the risk associated with producing new products and processes.
In recent times, R&D tax incentives have undergone significant change. Don’t be put off by perceived complexity and additional risk relating to the new framework. With the right specialist partner and tailored support, your business could enjoy far-reaching benefits, in addition to those generated for the wider economy and society. At ForrestBrown, we take a rigorous approach to delivering R&D claims based on the latest guidance from HMRC.
Here's everything you need to know about R&D tax credits, and how you can secure the funding your innovation deserves.
Speak to our expert team today to find out more about R&D tax credits.
Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation. They are a valuable source of funding for businesses to invest in accelerating their R&D, hiring new staff and ultimately growing.
R&D tax credits were introduced in 2000, initially for SMEs, under Gordon Brown’s Labour government. This brought the UK into line with several other countries already offering similar tax incentives to encourage private sector innovation. A large company scheme was introduced two years later, in 2002.
R&D helps drive productivity and economic growth, with benefits for society as a whole. R&D tax incentives encourage businesses to invest in developing new technologies which deliver social returns as well as supporting commercial success.
Companies that spend money developing new products, processes or services, or enhancing existing ones, could be eligible for R&D tax relief. If you’re investing in innovation, you may be eligible to make an R&D tax credit claim to receive either a cash payment and/or Corporation Tax reduction.
It’s important to understand whether your project qualifies. HMRC provides guidance to help businesses, and issues guidelines on the meaning of R&D for tax purposes. Claims for accounting periods beginning on or after 1 April fall under a merged scheme, while claims for periods prior to this are subject to different rules depending on the size of the business.
To benefit from R&D tax incentives, you must:
UK companies working on innovative projects in science and technology could be eligible to claim R&D tax relief.
R&D takes place in a wide range of industries. Manufacturing, Information and Communication, and Professional, Scientific and Technical are the top three sectors for R&D tax credit claims.
It is unlikely that you will be eligible if your activity is not recognised as a scientific or technological innovation. You cannot claim if the advance is in the arts, humanities or social sciences (including economics).
HMRC also provides information on the types of claim which are rarely eligible, including those from care homes, childcare providers, personal trainers, wholesalers and retailers, pubs and restaurants.
Contact us to find out if your business qualifies for R&D tax credits.
If your company is taking a risk by attempting to resolve scientific or technological uncertainties then you may be carrying out qualifying activity. This could include:
Within the government’s accepted research and development definition, R&D doesn’t have to have been successful to qualify. Further detail is available in our KnowledgeBank article: How do I know if I’m carrying out qualifying R&D?
Where qualifying activity is being undertaken, certain costs may qualify for R&D tax relief. They fall into the following categories:
Read our article for more on what qualifies for R&D tax credits >
Projects can consist of a number of activities conducted to achieve an advance in science or technology. Getting the boundaries of a project right is important. While a project should encompass all activities required to resolve the scientific or technological uncertainty, it may be part of a larger commercial project which may include elements which are not R&D.
For accounting periods beginning on or after 1 April 2024, all companies will claim under a merged scheme – with the exception of R&D intensive loss-making SMEs qualifying for enhanced R&D intensive support (ERIS).
For the purposes of R&D tax relief, SMEs are defined as having fewer than 500 employees and either an annual turnover of less than €100 million or a balance sheet of less than €86 million. Businesses not meeting this criteria are categorised as large.
R&D tax credits are calculated based on your R&D spend in relation to your qualifying activity. Depending on what incentive you’re claiming under, the rates of relief can vary as shown in the table below.
SME R&D tax incentive | RDEC | Merged scheme | Enhanced R&D intensive support | |||
---|---|---|---|---|---|---|
Company type | Before 1 April 2023 | After 1 April 2023 | Before 1 April 2023 | From 1 April 2023 | From 1 April 2024 | From 1 April 2024 |
Loss-making SME | Up to 33.35% | Up to 18.6% | 10.5% | 15% | 16.2% | |
Profit-making SME | Up to 24.7% | Up to 21.5% | 10.5% | Up to 16.2% | Up to 16.2% | |
R&D intensive SME | Up to 27% | Up to 27% | ||||
Large company | 10.5% | Up to 16.2% | Up to 16.2% |
According to HMRC statistics for the tax year 2022 to 2023, the average R&D tax credit claim made under the SME scheme was around £81,000.
The average claim under the RDEC scheme for large companies was just over £291,000.
As a form of innovation funding, R&D tax credits can transform your business. At ForrestBrown, we are passionate about helping innovative companies realise the full potential of R&D tax incentives so that they can grow. This is because the benefits are wide-reaching.
The government benefits from increased productivity which is good news for UK businesses, and good news for the economy. It can also lead to innovation that can effect positive change on a global scale.
We use a rigorous, continually-improving process to deliver robust R&D tax credit claims that meet HMRC’s latest requirements. We’d love to find out more about your business and discuss how we might be able to help.