Eligibility

R&D is not an industry-specific tax benefit, the aim of the scheme is to promote innovation of science and technology within the UK. The R&D tax scheme is not limited to a specific industry, providing you are trying to “advance overall scientific or technological knowledge” to “overcome a non-readily-deducible scientific or technological uncertainty” you could potentially claim for R&D. Your R&D project has to relate to your core business or an area in which you are anticipating will become your business.

It is important to note that recent HMRC compliance checks have looked very closely at R&D claims in industries (identified by a Companies House SIC code) where it is considered R&D would be unlikely. We recommend that your SIC code accurately reflects all the fields you are working in.

If you work in an industry where a layperson wouldn’t consider R&D normally takes place, please ensure you understand the formal definition of R&D for tax purposes.

The company must be a Limited Company registered in the UK.

Accounts for the claim year should have been prepared on a ‘going concern’ basis. The company must be expected to continue trading in the foreseeable future. Please note that HMRC will not pay out if a company has ceased trading on the date a payment is due to be authorised.

There are special rules for companies and individuals that are connected, linked or partnered, both for qualification as an SME company, and for external worker and subcontractor relationships and costs.

In general, group company structures involving companies where ownership is at least 25% need detailed investigation to establish whether a company is an SME for R&D purposes. For periods starting after 1 April 2024, this distinction is no longer relevant (unless the company is R&D intensive).

Claimable R&D work undertaken must have been a, or part of a, project. This means that there should have been an aim, a plan of actions/activities, milestones, and results or outcomes. Evidence of the plan should be kept.