What qualifies as R&D activities for the R&D Tax Credits scheme?
Understanding qualifying R&D activities is one of the most important steps when assessing eligibility for R&D tax credits.
Many companies assume they don’t qualify for R&D tax relief because they are not conducting scientific research in a laboratory. In reality, businesses across manufacturing, software, engineering, construction, food production, and many other sectors successfully claim every year by undertaking qualifying R&D activities.
HMRC uses guidelines issued by the Department for Science, Innovation and Technology (DSIT) to determine whether a project qualifies as R&D for tax purposes. While the DSIT R&D Guidelines provide a comprehensive framework for assessing R&D eligibility, they should not be relied upon in isolation. Other important sources of guidance, including the CIRD (Corporate Intangibles Research and Development) Manual and HMRC’s guidance for compliance, should also be considered when determining qualifying R&D activities.
1. A qualifying project must aim to achieve an advance in science or technology
This could involve creating a new product, process, or software solution, or significantly improving an existing one. The advance must contribute to the overall knowledge or capability within a field.
2. Your project must involve scientific or technological uncertainty
This means there is no readily available solution, and a competent professional working in the field could not easily determine how to achieve the desired outcome. If the answer is already known or publicly available, the work is unlikely to qualify as R&D.
3. The uncertainty must be resolved through development
To be eligible, the business must undertake a process of research, testing, analysis, or experimentation to overcome the uncertainty. This often involves developing prototypes, conducting trials, evaluating different approaches, and refining solutions until a viable outcome is achieved.
4. The knowledge must not be publicly available
The solution being sought must not already exist within the public domain or be considered standard industry practice. If the required knowledge, technique, or technology is already widely known and accessible, the activity will not qualify as R&D.
A wide range of activities can qualify for R&D Tax Relief, provided they directly contribute to, or support, a project that seeks to achieve an advance in science or technology. Qualifying work may be carried out as part of developing your own services, software, products, or processes, and in some circumstances, activities undertaken on behalf of clients may also be eligible. A non-exhaustive list of eligible activities can be found below:
Send our R&D Specialists a message today to discuss your project and find out if your business is eligible to claim R&D Tax Credits
Get in touchThere are many activities that support innovation within a business; however, not all of them will qualify for R&D Tax Relief. The key thing to consider is that the activity must directly contribute to resolving a scientific or technological uncertainty.
Activities that generally do not qualify are:
Our specialists can review your projects, assess eligibility, and help identify qualifying expenditure for your R&D Tax Relief claim.
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