How to Claim R&D Tax Relief

Your project must seek an advance in science or technology by resolving a scientific or technological uncertainty. This includes developing new products, processes, or services, or appreciably improving existing ones. The uncertainty must not be readily deducible by a competent professional.

Under the merged R&D scheme (from April 2024), companies can claim an enhanced deduction of 86% on qualifying R&D expenditure, reducing their Corporation Tax bill. Loss-making SMEs may be able to claim a tax credit of up to 14.5% of qualifying expenditure.

Yes, software development can qualify if it involves resolving technological uncertainty. Building a standard website or app using existing tools does not qualify. However, developing novel algorithms, solving complex integration challenges, or creating new technical capabilities may qualify.

You can claim R&D tax relief for the current accounting period and amend returns for the previous two accounting periods. Claims must be made within the Corporation Tax return filing deadline, which is 12 months after the end of your accounting period, or within the amendment window.

While not legally required, using an R&D tax specialist is recommended for your first claim. They help identify qualifying activities, calculate the claim correctly, and prepare the technical narrative that HMRC may request. Many specialists work on a success-fee basis.