What R&D tax relief means now
Businesses still commonly search for “R&D tax credits”, but the rules have changed. For accounting periods beginning on or after 1 April 2024, claims are generally made under the merged R&D expenditure credit scheme or, for qualifying loss-making R&D-intensive SMEs, Enhanced R&D Intensive Support (ERIS).
The name of the scheme does not decide whether a project qualifies. The central question is whether the company sought an advance in science or technology and had to address scientific or technological uncertainty that a competent professional could not readily resolve.
Read Lexmore's guide to R&D tax reliefWhere qualifying R&D may arise in the West Midlands
Advanced manufacturing and process engineering
Potentially qualifying projects can involve new materials, tighter tolerances, novel joining or forming methods, automation, process control, inspection systems or attempts to manufacture at a scale or consistency not previously achievable. The claim must distinguish difficult R&D from routine optimisation, commissioning and ordinary production support.
Automotive, batteries and future mobility
The region's automotive and electrification ecosystem can generate R&D in battery systems, power electronics, thermal management, lightweighting, propulsion, vehicle software, testing and manufacturing methods. Eligibility depends on the technical advance and uncertainty, not participation in the automotive supply chain.
Sustainable construction and energy systems
Relevant work may include new construction materials, low-carbon processes, heat and energy systems, structural solutions or digital methods that address a technological limitation. Meeting a demanding client specification is not enough where the method of achieving it was already readily available.
Software, cyber and health innovation
Software businesses and engineering teams may qualify where they resolve non-routine problems in performance, security, integration, modelling or reliability. Health technology may involve additional scientific or device-level uncertainty. In both cases, the competent professional's explanation and contemporaneous records are critical.
Examples are not an eligibility test
The sector examples on this page illustrate where qualifying work can arise. A company does not qualify because it operates in a particular industry or location, and commercial novelty on its own is not enough. Eligibility depends on the project, the state of knowledge in the relevant field, the uncertainties encountered, the work undertaken and the costs claimed.
The role of local Investment Zones
The West Midlands Investment Zone is intended to support advanced manufacturing, battery, digital and sustainable-construction growth. Its local incentives are separate from R&D tax relief. Occupying a designated site does not cause a project to qualify, and any interaction between incentives should be checked rather than assumed.
Patent Box for West Midlands innovators
Patent Box may be relevant to profitable companies commercialising patented automotive, battery, engineering, medical or manufacturing technology. Reviewing patent ownership, development work and income streams early can prevent a company missing the normal election window.
Explore Patent Box tax reliefR&D tax relief questions from Birmingham businesses
Do custom engineering projects qualify?
Sometimes. Bespoke work is not automatically R&D. It may qualify where delivering it required an advance in science or technology and the route to that advance was not readily deducible by a competent professional.
Can failed prototypes and trials be relevant?
Yes. A project does not need to succeed. Failed trials can be strong evidence of genuine uncertainty, provided the project met the definition and the records show what was attempted and learned.
Can we claim for production equipment?
R&D tax relief mainly concerns qualifying revenue expenditure. Capital expenditure may fall under different rules, including Research and Development Allowances in some circumstances, and should be reviewed separately.
How Lexmore approaches a claim
Lexmore starts with an honest assessment of the project rather than an assumed claim value. We speak with the people who understand the technical work, establish the baseline that existed when the project began, identify the advance being sought and test whether the uncertainties meet the statutory definition.
We work with businesses across the UK and regularly travel to meet clients on site. Where practical, we prefer to see the operation for ourselves, meet the people behind the work and understand how the business develops its products, processes or technology. If an on-site visit would help us understand your R&D properly, we are happy to make that effort. Remote meetings remain available where they are more convenient or appropriate.
Where a claim is supportable, we then map the qualifying activity to the relevant costs, prepare the technical and financial evidence, support the Additional Information Form and work with your accountant on the Company Tax Return. Careful review is built into the process, and support is included if HMRC opens an enquiry into work we prepared.
Sources and further guidance
Unsure whether your project meets the R&D test?
Book a free initial assessment with Lexmore. You will get a straightforward view of the potential eligibility, the scheme and deadlines likely to apply, and what evidence a claim would need. If we do not believe the work qualifies, we will tell you plainly.