R&D tax credits are one of the most valuable reliefs available to UK businesses — and one of the most underused. HMRC's own data suggests that a significant proportion of eligible businesses either don't claim or under-claim. If you're doing anything that involves solving a technical or scientific problem, you should at least have a conversation about whether you qualify.
What counts as R&D?
The definition is broader than most people expect. HMRC's test is whether your project seeks to achieve an advance in science or technology and whether it involves resolving scientific or technological uncertainty — meaning you couldn't just look up the answer.
This includes:
- Software development that pushes beyond standard techniques
- Developing new products or processes
- Improving existing products in technically novel ways
- Work that failed — unsuccessful R&D is still R&D
The two schemes
Following the 2023 reforms, there are now two main routes:
The merged scheme (for most companies)
From April 2024, most companies use the merged scheme, which provides an above-the-line credit of 20% of qualifying expenditure. For loss-making companies, a payable credit of 19.6p in the pound is available.
The ERIS (for R&D intensive SMEs)
SMEs where qualifying R&D expenditure represents at least 30% of total expenditure qualify for enhanced relief — a payable credit rate of 27p in the pound for loss-making companies.
"If you're a software business or a product business solving hard problems, and you're not claiming R&D relief, you are almost certainly leaving tens of thousands of pounds on the table every year."
What costs can you claim?
- Staff costs (including NIC and pension contributions)
- Subcontractor and externally provided worker costs
- Consumables and materials used in R&D
- Cloud computing and data costs (introduced from April 2023)
- Software licences used in R&D
How to claim
Claims are made through your company tax return (CT600) and require an additional information form to be submitted to HMRC. Since August 2023, all claims require pre-notification if your company is claiming for the first time or has not claimed in the previous three years.
Runway handles R&D claims for clients across sectors — technology, construction, food and drink, manufacturing, professional services. The key is identifying the qualifying projects and documenting them properly. We do that work with you, not just for you, because the technical knowledge lives in your team.
If you'd like to understand whether your business has a credible R&D claim, get in touch. We'll give you an honest initial assessment.
