A government tax relief incentive designed to support businesses overcoming technological or scientific uncertainties.
R&D (Research and Development) tax relief is a UK government incentive designed to support innovation. It allows eligible UK companies to reduce their Corporation Tax bill, or in some cases, receive a cash credit, in recognition of qualifying R&D activity.
The relief is intended to help offset the costs of innovation, including staff time, subcontractors, software, data licences, cloud computing, consumables and utilities, where those costs relate directly to R&D.
Overseas work: For accounting periods beginning on or after 1 April 2024, contracted-out R&D and payments for externally provided workers generally qualify only where the R&D activity takes place in the UK. Limited exceptions apply where conditions necessary for the R&D are not present in the UK and it would be wholly unreasonable to replicate them here. Lower costs or the availability of workers overseas are not qualifying reasons.
Read HMRC’s overseas expenditure guidanceAs of 1 April 2024, most UK companies now claim R&D tax relief through RDEC, replacing the previous SME and RDEC routes.
Relief is typically worth around 15% of qualifying R&D expenditure for profit-making companies (after tax), 16.2% as a cash credit for loss-makers or up to 27% for R&D intensive loss makers.
Loss-making SMEs that spend at least 30% of their total costs on qualifying R&D may be eligible for Enhanced R&D Intensive Support. ERIS is not available to large companies.
This can increase the cash credit rate for these loss-making SMEs to around 27%.
Even if your R&D is subsidised, for example through a grant, you can still claim under RDEC. The old restrictions on SME claims for subsidised projects no longer apply.
Summary by accounting period start date
Claims depended on company size and funding structure. SMEs could access enhanced relief, while larger companies used RDEC. Subsidised R&D reduced SME benefits.
Single unified scheme with 20% above-the-line credit. Net benefit ~15% for profit-makers, up to 16.2% cash credit for loss-makers.
Loss-making companies spending 30%+ on R&D qualify for higher cash credits, worth up to ~27% of qualifying expenditure.
R&D tax relief applies across a wide range of industries, some more commonly than others.
Developing new products, materials, or improving production processes
Resolving mechanical, electrical, civil, process or systems engineering challenges
Building new digital platforms, systems, or solving technical challenges in code
Improving energy efficiency, reducing emissions, or developing clean technologies
Conducting medical research, developing treatments, or improving formulations
Enhancing shelf life, food safety, or production efficiency through technical changes
HMRC defines R&D as activities that aim to achieve an advance in science or technology through the resolution of uncertainty.
Developing or improving software platforms or systems
Creating new materials or products
Enhancing manufacturing processes for efficiency or sustainability
Adapting existing technologies for new applications
Resolving technical problems where the solution was not readily deducible by a competent professional
A project does not need to have succeeded to qualify. What matters is whether you set out to achieve an advance in science or technology, and whether a competent professional in your field could have readily worked out how to get there. If they could not, the uncertainty was real, and the work may qualify whether or not it worked.
A comprehensive guide explaining how RDEC affects your Corporation Tax liability, with practical examples and advancement strategies.
Download our comprehensive R&D Tax Relief Guide to understand eligibility, qualifying activities, and the claims process in detail.
R&D tax relief can deliver substantial financial benefit, but it's a complex area that demands accuracy, clarity, and sound judgement.
We take time to understand your business and carefully assess the activities and costs relevant to your claim.
We prepare detailed, carefully documented claims with a strong emphasis on compliance, giving you confidence and peace of mind.
We're with you beyond submission deadlines, offering ongoing guidance and strategic input as your business evolves.
Partnership Beyond Compliance
Supporting accurate claims and informed decisions about future innovation.
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Great team of people who worked with us to make the whole process quick and simple. They gave expert advice all the way, along with offering other services which were helpful. Never pushy just professional, efficient at what they do.
Call or message us today. No commitment, no pressure and no obligations.
Just an honest, expert conversation regarding your eligibility.
Let's explore how Lexmore can make a difference for you and your business.
From initial assessment to ongoing aftercare, we guide you through every step of the R&D tax relief process with comprehensive support
30 - 60 Min Meeting
Free consultation to understand your R&D activities and determine eligibility
Quick claim estimate using your P&L accounts and industry averages to help you decide whether to proceed
1 - 6 Meetings
Detailed analysis of your R&D projects with comprehensive evidence gathering
Breakdown of qualifying expenditure and cost categorisation for your R&D claim
7 - 14 Days
Complete technical narrative and financial report, compliance-approved and sent for your review
Before submission, we'll review your company's tax position, confirm the expected treatment of the claim, and ensure all supporting documentation is ready for HMRC.
Submission to HMRC either via your accountant or revisions to your tax documents, with all required documentation
Ongoing
HMRC aims to process 85% of claims within 40 days. In 2024/25 it processed 90% within that window, alongside ongoing support and claim defence
Fill in the boxes, your estimate updates as you type.
For financial periods starting on or after 1 April 2024
Enter your best estimate of spend on qualifying R&D activity. This is not your total development, engineering or project budget.
Qualifying spend covers only the staff time, contracted-out R&D, externally provided workers, consumables, software, data licence and cloud costs attributable to work that sought a scientific or technological advance. Most companies overestimate this figure before a technical review, so treat whatever this produces as an upper bound rather than a target.
For periods beginning on or after 1 April 2024, overseas contracted-out R&D and externally provided worker costs are generally restricted. Limited exceptions apply where necessary conditions cannot reasonably be replicated in the UK; lower costs or overseas worker availability alone are not enough.
Ready to discover your R&D tax relief potential? Contact us today for a comprehensive assessment of your eligibility.
info@lexmore.co.uk
Phone
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Response Time
Within 24 hours
Common questions about R&D Tax Relief answered by our experts
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Insights and guides about R&D Tax Relief
The tax rules are national, but the technical work behind a claim varies by sector and location. Our regional R&D guidance looks at common areas of innovation, the evidence that may be needed and related tax considerations in different parts of the UK.
Explore regional R&D guidance