Research and Development (R&D) tax relief is one of the most valuable tax incentives available to UK companies — but most small companies don't claim it. If your company develops new products, processes, or services, you could be leaving thousands of pounds on the table.

What Is R&D Tax Relief?

R&D tax relief lets your company reduce its Corporation Tax bill (or get a cash payment) when it spends money on qualifying research and development activities.

The landscape changed significantly from April 2024. For accounting periods beginning on or after 1 April 2024, most companies use the merged R&D expenditure credit scheme (RDEC) — a single scheme that replaced the old SME R&D Relief and the old RDEC. Loss-making R&D-intensive SMEs may instead use Enhanced R&D Intensive Support (ERIS).

Scheme	Applies to	Key benefit
Merged RDEC	All companies — APs starting on/after 1 Apr 2024	20% above-the-line expenditure credit
ERIS	Loss-making R&D-intensive SMEs (R&D spend ≥30% of total expenditure), APs starting on/after 1 Apr 2024	14.5% payable cash credit
Old SME Relief	SMEs with <500 staff, <€100m turnover — APs starting before 1 Apr 2024	Enhanced deduction of 86% + 10% payable credit
Old RDEC	Large companies or SMEs with subsidised R&D — APs before 1 Apr 2024	20% above-the-line credit

For most companies filing returns for accounting periods starting on or after 1 April 2024, the merged RDEC scheme applies.

What Qualifies as R&D?

Your project qualifies if it seeks to achieve an advance in science or technology by resolving scientific or technological uncertainty.

In plain English: if you're trying to do something that isn't straightforward and you don't know if or how it can be done, it might qualify.

Examples That Often Qualify

Software development: Building new algorithms, AI/ML models, integrating complex systems in novel ways
Engineering: Designing new products, improving manufacturing processes
Food & drink: Developing new formulations, shelf-life extension
Construction: New building techniques, materials testing
Life sciences: Drug development, medical devices, clinical trials

Examples That Usually Don't Qualify

Using existing technology in a standard way
Cosmetic changes or routine updates
Market research or commercial innovation (without technical uncertainty)
Simply buying and implementing off-the-shelf software

How Much Can You Save?

Merged RDEC (Accounting Periods Starting on or After 1 April 2024)

The merged scheme provides a 20% R&D expenditure credit. The credit is "above the line" — it is recognised as income in your accounts and then set against your Corporation Tax bill.

If your company is profitable:

Take your qualifying R&D spend (e.g., £100,000)
Credit: £100,000 × 20% = £20,000
The credit is treated as taxable income — at 25% CT: £20,000 × 25% = £5,000 extra tax
Net saving: £20,000 − £5,000 = £15,000 on £100,000 of R&D spend

(At the 19% small profits rate, the net saving is approximately £16,200.)

If your company is loss-making:

You can receive the net credit as a cash payment from HMRC, subject to a cap linked to your PAYE and NI costs. For a £100,000 claim, up to £20,000 can be refunded as cash (before the PAYE cap applies).

ERIS (Loss-Making R&D-Intensive SMEs)

If your company is loss-making, qualifies as an SME, and your R&D spend is at least 30% of your total expenditure, you may qualify for ERIS. This provides a 14.5% payable cash credit directly from HMRC — a higher cash rate for qualifying R&D-intensive companies.

Pre-April 2024 Claims (Old SME Scheme)

For accounting periods starting before 1 April 2024, the old SME scheme applied:

Take your qualifying R&D spend (e.g., £100,000)
Apply the 86% enhancement: £100,000 × 86% = £86,000 additional deduction
Total deduction: £186,000
Tax saving at 25%: £186,000 × 25% = £46,500 (vs £25,000 without R&D relief)

If loss-making: payable credit of 10% of the enhanced loss → up to £18,600 on £100,000 of R&D spend.

What Costs Qualify?

Staff costs — salaries, NI, pension contributions of staff directly involved in R&D
Subcontractor costs — 65% of payments to subcontractors for R&D work
Consumables — materials, utilities used in R&D
Software — licences for software used directly in R&D
Clinical trial volunteers — payments to participants

Staff costs typically make up 60–70% of most R&D claims.

Which CT600 Boxes to Complete

R&D claims require the CT600L supplementary page. The key boxes on the main CT600 are:

Box	Description
Box 142	Tick to confirm you are claiming R&D relief — this triggers the CT600L supplementary page
Box 650	Tick if the claim is made by an SME (including an SME subcontractor to a large company)
Box 653	Tick if the claim is made by an R&D-intensive SME (ERIS claimants)
Box 656	Tick to confirm a pre-notification (claim notification form) has been submitted
Box 657	Tick to confirm the Additional Information Form has been submitted
Box 530	R&D credit — the tax credit amount carried across from box L210 of CT600L
Box 570	Surplus R&D credits payable — any credit that exceeds your CT liability, paid as cash by HMRC

For old SME scheme claims (accounting periods starting before 1 April 2024), box 660 (R&D enhanced expenditure — the total figure resulting from adding the additional deduction to the qualifying expenditure; e.g. £186,000 on £100,000 of qualifying spend under the 86% enhancement) is completed on the main CT600.

How to Claim

Step 1: Identify Qualifying Projects

Review your company's activities and identify projects that involved technological uncertainty. Keep contemporaneous records — don't wait until year-end.

Step 2: Calculate Qualifying Costs

Add up the staff costs, subcontractor costs, consumables, and software for each qualifying project. Apply the relevant percentages (e.g., 65% for subcontractors).

Step 3: Write a Technical Narrative

HMRC requires a written description of:

What advance in science/technology you sought
What uncertainties existed
How you tried to overcome them
What the outcome was (success or failure — both qualify)

Step 4: Complete Your CT600 and CT600L

Tick box 142 on your CT600 and complete the CT600L supplementary page with your R&D expenditure breakdown.

Step 5: Submit the Additional Information Form

From 8 August 2023, all R&D claimants must also submit an Additional Information Form (AIF) to HMRC before or alongside their CT600. This includes:

A summary of each R&D project
The costs claimed per project
Agent details (if using one)

Common Mistakes

Not claiming at all — the biggest mistake. Many directors think R&D relief is only for labs and scientists
Claiming too late — R&D claims must be made within 2 years of the end of the accounting period
Not keeping records — HMRC can enquire into R&D claims for up to 6 years
Overclaiming — including routine work or commercially-driven activities
Missing the pre-notification — first-time claimants (or those who haven't claimed in 3+ years) must notify HMRC within 6 months of the end of the period
Missing the AIF — the Additional Information Form has been mandatory since 8 August 2023 and must be submitted before or with the CT600

Should You Use a Specialist?

R&D tax relief claims can be complex, and HMRC scrutinises them closely. For straightforward claims (small software companies with clear R&D projects), you can self-claim on your CT600 and CT600L.

For larger or more complex claims, consider using an R&D tax specialist. They typically charge 15–25% of the successful claim value — paid only if the claim succeeds.

File Your CT600 with Taxpipe

R&D claims require the CT600L supplementary page and specialist software. For straightforward Corporation Tax returns — trading profits, property income, capital gains, and dormant companies — Taxpipe makes CT600 filing simple. Answer plain-English questions and file directly to HMRC for just £59 per return.

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R&D Tax Relief for Small Companies: What to Claim on Your CT600