R&D and RDEC Tax Credits
Research & Development tax relief is one of the most generous incentives available to UK companies. Many businesses that qualify never claim it.
The R&D Relief Schemes
SME R&D Relief
Loss-making SMEs can surrender losses for a cash credit. Profitable SMEs deduct an enhanced 186% of qualifying costs from taxable profits.
RDEC (R&D Expenditure Credit)
Larger companies and SMEs that have received certain grants use RDEC. The credit rate is 20% of qualifying R&D expenditure, taxable but offset against your tax bill.
Merged Scheme (from April 2024)
HMRC merged the SME and RDEC schemes for expenditure from 1 April 2024. Most companies now claim under the new merged scheme with a 20% credit rate.
Qualifying Costs
Staff costs, subcontractors (subject to limits), consumables, software, cloud computing and data licences used in qualifying R&D projects can all be claimed.
What Activities Qualify?
R&D relief isn't just for scientists in labs. Many technology, engineering, food, construction and professional service businesses qualify.
- Developing new products, processes or services
- Appreciably improving existing products or processes
- Overcoming scientific or technological uncertainty
- Software development with technical challenges
- Prototyping and testing activities
- Work that a competent professional couldn't easily replicate
Important: HMRC Pre-Notification
From 1 April 2023, companies that have never claimed R&D relief (or haven't claimed in 3 years) must notify HMRC within 6 months of the end of the accounting period. Missing this deadline means losing the claim entirely.
Could Your Business Claim R&D Relief?
We'll review your activities and costs to identify qualifying expenditure and prepare a robust, HMRC-compliant claim.
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