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 Cambridge
Biotechnology and life sciences
Potential R&D can arise in therapeutics, diagnostics, assays, biological processes, instrumentation and laboratory technology. Claims need to define the scientific advance, the uncertainties and the experimental work. Regulatory compliance, routine data gathering and commercial product activity should not be treated as qualifying merely because they surround scientific work.
Semiconductors, electronics and advanced connectivity
Cambridge companies may encounter uncertainties in chip design, architectures, sensing, materials, communications, power use or system integration. Patentable technology is often relevant, but a patent and an R&D tax claim apply different legal tests and neither proves the other.
AI, software and quantum technology
These projects can involve difficult questions of baseline knowledge. A claim should explain what capability was unavailable or inadequate, why a competent professional could not readily derive the solution, and what systematic work addressed the limitation. Technical sophistication alone is not the same as qualifying uncertainty.
Scientific instruments and engineering
Work on imaging, measurement, control, robotics and scientific instrumentation may qualify where teams push beyond established capability. Evidence from prototypes, calibration, testing and failed approaches helps show where routine engineering ended and R&D began.
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.
R&D-intensive companies and ERIS
Some loss-making Cambridge SMEs with substantial qualifying R&D expenditure may meet the ERIS intensity condition. The calculation is company- and period-specific, including connected-company considerations. It should be tested from the underlying expenditure rather than inferred from a company's identity as a research business.
Patent Box should be considered early
Cambridge's concentration of patented science and technology makes Patent Box particularly relevant. A company that owns or exclusively licenses qualifying rights, has undertaken qualifying development and earns relevant IP income may be able to apply a 10% Corporation Tax rate to qualifying relevant IP profits. Early review matters because ownership, group arrangements, development history and the election deadline can affect the outcome.
Explore Patent Box tax reliefR&D tax relief questions from Cambridge companies
Does university collaboration affect a claim?
It can. The contract, funding, ownership of the project and responsibility for the R&D all matter. Collaboration does not prevent a claim, but it can change who may claim and which costs are available.
Does a patent prove that a project qualifies for R&D relief?
No. The regimes have different tests. A patent can be useful supporting context, while an unpatented project may still qualify for R&D relief.
Can overseas laboratory or development work be claimed?
The current rules generally focus relief on UK activity, with limited exceptions for qualifying overseas expenditure. Each supplier and arrangement should be reviewed.
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.