R&D Tax Credits Explained

The Ultimate Guide to R&D Tax Credits

New to R&D Tax? Unsure how to cut through the noise and find out what can and cannot qualify? Find out  about R&D tax credits, eligibility requirements, and how to make the most of it safely here.



What are R&D tax credits?

R&D Tax Credits are used by HMRC to encourage and support innovation and R&D within the UK.

Boosting R&D investment leads to new technologies, products, and processes that drive national economic growth and competitiveness. R&D tax credits can also help address market failures, such as a lack of private sector investment in certain areas of research, by providing financial support to companies engaged in pushing the envelope in their respective fields.



How do R&D tax credits work?

R&D tax credits provide a financial boost to eligible companies that invest in research and development. Whether you’re creating new products, improving existing ones, or exploring innovative solutions, R&D tax credits are available to companies across a wide range of industries. The key is to ensure that the R&D initiatives pass an examination by HMRC to determine their level of innovation.

Companies can receive a credit against their corporation tax liability or a cash benefit based on a percentage of their eligible R&D expenditures. The credit can be claimed up to two years after the expenses have been incurred. Depending on a company’s financial situation, the credit can reduce their tax liability, provide a refundable tax credit, or be used as a loss carry back.


Why us?


When it comes to claiming R&D Tax in a compliance-focused environment,  ensure only to seek advice from experts who understand your work as well as the legislation. Ultimately you should trust them implicitly to defend your company in the event of an enquiry.

That means you need experts with ethics. We pride ourselves on our exceptional team. All compliance process is led by former HMRC R&D Tax inspector Malcolm Henderson. With over 26 years of industry experience including nearly two decades with HMRC, Malcolm’s expertise is fairly unmatched within the private sector. It’s why we pre-enquire every claim internally before submission.


It doesn’t stop with him though. The team alongside Malcolm comprises seasoned professionals from top financial consulting firms, industry-leading sector specialists, and ACA-qualified accountants. When combined with a top-tier account management service we strive to exceed expectations in both experience and expertise.

Wider Tax Knowledge

None of our services exists in a bubble, and we are always looking at ways to expand partnerships with clients to ensure that their wider company is as tax efficient as possible and aware of all avenues of funding available.

Don’t take our word for it, the numbers speak for themselves.

  • 97% Retention rate
  • £50m+ Secured
  • Assisting 500+ businesses.


Is my business eligible for R&D tax credits?

Are you a UK-based company that invests in research and development? If so, you may be eligible for R&D tax credits.

The criteria for eligibility can seem vague and complex at first glance as you try and decipher factors such as technological uncertainty and scientific advancements.

The government’s 12-page definition of R&D for tax purposes, and the significantly more expansive CIRD manual, can make it challenging to determine which of your projects qualify. That’s why it’s essential to seek expert advice to maximise the benefits of your R&D investments.

The type of R&D scheme you can claim will depend on factors such as the size of your business, whether you’ve received any grants or subsidies, and if you work as a subcontractor for a client.

Small and medium-sized enterprises with fewer than 500 employees typically claim under the SME Scheme, which offers more generous benefits. Large companies can claim under the RDEC scheme, which as of 2023 has recently in some respects become nearly as generous as the SME Scheme.

Unlock the Benefits of R&D Tax Credits: Watch Our Explanatory Video





What industries qualify for R&D tax credits?

Applicants to the R&D scheme are nearly as diverse as Companies House itself, but some of the most common claimers will be included below.

  • Construction
  • Engineering
  • Food + Beverage
  • Software
  • Sports organisations
  • Agriculture
  • Aerospace
  • Renewables
  • Pharmaceuticals

To find out about some of the most common claimants, head to our industries page.



How much is an R&D tax credit claim worth?

R&D tax credits are a government incentive that can benefit your company. However, it’s important to be cautious of providers that promise an “instant” calculation.

To determine the actual amount your company can claim, consider these three factors:

  1. Eligibility for SME or RDEC
  2. The amount of qualifying R&D expenditure
  3. Financial state of your company during the accounting period of the R&D.
  4. Whether the costs were incurred before or after April 2023.


Through the Research and Development Tax Credit program, your company may be able to receive a refund of up to 33% of your development expenses in the form of a tax credit or cash rebate. The precise amount you can claim will depend on various factors, including the size and financial condition of your business.

It’s important to note that online calculators may not accurately reflect the full complexity of the R&D tax credit calculation. To provide you with the most accurate assessment of your potential claim, we have decided not to offer an online calculator. Instead, we recommend reaching out to an expert for a personalized, in-depth evaluation.

Book a free 15 minute assessment call here



R&D expenditures that qualify:

When it comes to R&D tax credits, not all expenditures are created equal. To maximise your claim, it’s important to understand which costs are eligible.

Here are some common types of R&D expenditures that may qualify:

  1. Payroll/Staffing expenses: The wages of employees who are directly and indirectly involved in the R&D project may be included in your claim.
  2. Subcontracted R&D: Small and medium-sized enterprises (SMEs) can claim up to 65% of their relevant subcontracting expenditure. However, large companies claiming under the RDEC cannot.
  3. Externally Sourced Personnel (EPWs): Employees provided by a staffing supplier, provider, or another group company can be claimed up to 65%. This includes agency employees, independent contractors, and freelancers.
  4. Consumable Items: These are tangible items that are used and consumed directly in R&D projects. Examples include components and equipment.
  5. Software: The cost of software and licenses used in R&D initiatives may be deductible. If the software is also used for regular business operations, a fair portion of the cost should be included in your claim.
  6. Utilities: Electricity, water, and fuel used specifically for R&D projects may also be eligible for a claim.

Find an Advisor You Can Trust!

Navigating the eligible costs for an R&D tax credit claim can be complex, so don’t take advice unless it’s from experts. Reach out to us today and find out where your company stands with R&D Tax!

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For more information, please get in touch today!