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 Bristol and Bath
Aerospace, composites and advanced engineering
Projects may involve new materials, structures, propulsion, control, simulation, manufacturing methods or performance in demanding conditions. Routine design against established standards will not normally qualify, while systematic work to overcome a technological limitation may do so.
AI, high-performance computing and software
Potential R&D may arise when development teams tackle non-routine limitations in computation, modelling, performance, security, data processing or interoperability. Using an advanced computing facility or an AI tool is not itself an advance; the claim must explain what technical capability the company sought to extend.
Semiconductors, telecoms and quantum technology
Relevant projects may involve chip design, photonics, communications, sensing, hardware-software integration or quantum systems. The evidence should identify the state of knowledge at the project's outset and the investigative work undertaken.
Creative and immersive technology
Bristol and Bath's creative-technology businesses may undertake R&D in real-time systems, rendering, simulation, image or audio processing and immersive platforms. Creative output, content and routine implementation do not qualify simply because the finished experience is novel.
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.
From prototype to manufacture
R&D can continue through prototyping and scale-up where scientific or technological uncertainty remains. It generally ends once the uncertainty has been resolved and the work becomes routine production or commercial preparation. Drawing that boundary accurately is particularly important for engineering and manufacturing claims.
Patent Box for West of England innovators
Patent Box may be relevant where patented aerospace, engineering, semiconductor, medical or other technology produces qualifying income. Businesses should consider it before the first profitable period is long past, while ensuring that patent strategy is driven by commercial and legal value rather than tax alone.
Explore Patent Box tax reliefR&D tax relief questions from Bristol businesses
Does prototype development qualify?
It can, but “prototype” is not a tax category. The work qualifies only to the extent that it forms part of resolving the scientific or technological uncertainty.
Can subcontracted testing be included?
Possibly. The contractual purpose, who contemplated the R&D, the nature of the activity and where it occurred all need review under the current rules.
What if our innovation combines hardware and software?
The project can be considered as an integrated system where that reflects the technical reality. The claim should still identify the advances and uncertainties precisely and allocate costs on a reasonable basis.
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.