R&D tax relief

Also called Research and development tax credits, RDEC, R&D claim

Corporation tax relief for work that seeks an advance in science or technology. Genuinely valuable, and heavily policed.

What it means

R&D tax relief reduces a company's corporation tax bill, or produces a payable credit, for qualifying expenditure on projects seeking an advance in a field of science or technology where the outcome was genuinely uncertain.

The schemes have been reformed repeatedly, with the SME and RDEC schemes merged for accounting periods starting on or after 1 April 2024 and a separate route for R&D-intensive loss-making SMEs.

Why it matters

For companies genuinely doing development work it can be a large sum, and it applies to far more than laboratories: software, engineering, materials and process development frequently qualify.

It also matters because HMRC has substantially tightened enforcement after widespread abuse by claims agents. A weak claim is now much more likely to be challenged.

What it looks like in practice

The test is technological uncertainty resolved by competent professionals, not novelty in the market. "Nobody has built this for our sector" is not the same as "this could not be worked out by a competent professional from published knowledge".

Most claims now require an Additional Information Form submitted before the return, and many require advance notification within six months of the period end. Miss the notification and the claim is lost regardless of merit.

What to watch out for

Agents working on contingent fees who promise a claim before understanding the work. HMRC's enquiry rate into these has risen sharply and the company, not the agent, carries the liability.

Routine development. Applying existing technology in a familiar way does not qualify however hard it was.

Where to get proper advice

GOV.UK holds the current scheme rules and deadlines. A reputable accountant or a specialist with technical people who will actually interview your engineers — not a form-filler.