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An Introductory Guide to Claiming R&D Tax Credits

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First of all, what are R&D tax credits? 

R&D tax credits reward businesses investing in innovation, helping to offset the costs and risks of developing products, processes, or software. If your company undertakes R&D projects to solve technological or scientific uncertainties, you may qualify for relief, even if the project doesn’t succeed.

Let’s find out more about eligibility, the costs you can claim, the claim notification form, and more helpful information you may need to know. 

Compliance - HMRC R&D Tax Enquiry

Are You Eligible for R&D Tax Credits?

To qualify for R&D tax relief, your work must meet HMRC’s criteria: 

  • Innovation: Your project seeks an advance in science or technology beyond the baseline. 
  • Uncertainty: You are tackling technical issues that a competent professional in the field couldn’t readily solve. 
  • Qualifying Activities: Includes design, prototyping, testing, and development to resolve the Uncertainty. 

Ineligible Activities: Routine updates, market research, or purely cosmetic improvements are not eligible. 

What Costs Can You Include in an R&D Tax Claim?

Maximising your claim starts with identifying and accurately tracking eligible costs: 

  • Staff Costs: Salaries, employer NIC, and pensions for employees involved in R&D. 
  • Subcontractors & External Staff: Claim up to 65% of subcontractor costs. 
  • Consumables: Materials and utilities like energy directly used in R&D. 
  • Software: Licenses or tools essential for your R&D projects. 

Tip: If employees split their time between R&D and non-R&D activities, apportion costs accordingly to avoid over-claiming. 

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Pre-Notification Form

Our article answers all the important questions on the new claim notification form.

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Claim Notification Form

From April 2023, HMRC introduced a Claim Notification Form for R&D tax relief.

The Claim Notification Form is a new requirement that notifies HMRC of your intention to apply for R&D tax relief. It is part of a series of measures implemented by the government to combat fraud. The form applies if:

✅ It’s your first R&D tax claim, or

✅ You haven’t claimed in the last three years.

✅ Or your first and last claim was after 1 April 2023

Key Details: 

You must submit the form within 6 months of the end of the accounting period in which R&D activity occurred. 

You must include your company’s Unique Taxpayer Reference (UTR), a detailed project description, key dates, contact details of any R&D Tax agents involved in your claim and the name of your key internal R&D contact. 

Failing to submit the claim notification form on time could disqualify your claim. 

Additional Information Form: Mandatory for All Claims

Introduced in August 2023, the Additional Information Form ensures transparency and streamlines the claims process. Without it, your claim will be rejected. 

HMRC want to know: 

  • A breakdown of costs (staff, consumables, software, subcontractors) by project. 
  • A detailed description of your R&D projects and the challenges faced covering Baseline, Advance sought, Uncertainties and how the Uncertainties were addressed by a Competent Person. 
  • Confirmation of compliance with HMRC’s rules. 

This form must be submitted online before your tax claim. 

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R&D Tax Relief Schemes: SME or RDEC?

Your eligibility depends on your business size and funding: 

  • SME R&D Tax Relief: For businesses with fewer than 500 employees and less than €100m turnover or €86m on the balance sheet. Provides enhanced relief. 
  • RDEC (Research and Development Expenditure Credit): For larger companies or SMEs excluded due to grant funding or subsidised projects. 
  • ERIS: For SME companies that are research intensive. 
  • New RDEC: For all companies with accounting periods starting after

Deadlines for R&D Tax Credit Claims

Timing is everything when it comes to R&D tax relief: 

  • Claims must be made within two years of the end of the relevant accounting period. 
  • Ensure your Claim Notification Form is submitted on time if required. 

HMRC Compliance and Audit Preparation

HMRC has increased scrutiny on R&D tax claims, making compliance critical: 

  • Maintain detailed project logs and plans, timesheets, financial records, and supporting documentation. 
  • Be audit-ready to provide evidence if required. 

Expert Support for Your R&D Tax Credit Claim

Navigating the R&D tax credit process can be complex, but you don’t have to do it alone. Our R&D tax specialists help you: 

  • Identify qualifying projects and activities. 
  • Maximise eligible costs. 
  • Prepare a robust technical narrative.

We aim to ensure your claim is accurate, compliant, and optimised for the best return. 

Ready to Claim Your R&D Tax Credits?

Contact our team of R&D tax experts today for a free consultation. We’ll guide you through every step of the process, from assessing eligibility to submitting your claim. 

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Further Information

Get in touch with
Ian Davie T: 01332 819740
E: info@tbat.co.uk