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Who is eligible?

R&D Eligibility Explained

R&D Tax Credits are a very niche part of the UK tax code that could bring your company thousands of pounds in tax relief. But first, it’s important to understand your R&D eligibility.

Businesses eligible for R&D tax credits

Companies of all sizes can claim R&D Tax Credits

The size of your business will determine which R&D Tax Credits scheme you are eligible for and ultimately what proportion of your spend you can claim back, but every business registered in the UK is eligible. R&D tax expenditure can be claimed by businesses in the following industries:

  • Animation, Games & Apps
  • Aviation & Marine
  • Chemicals & Sealants
  • Cosmetics & Personal Care
  • Construction & Property
  • Energy
  • Farming & Agriculture
  • Food & Drink
  • Manufacturing & Engineering
  • Medical & Pharmaceutical
  • Printing & Packaging
  • Quarrying & Mining
  • Security & Electrical
  • Software & IT
  • Textiles & Fabrics
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Which costs are eligible for R&D?

Eligible R&D activities:

  • Overcoming technical challenges
  • Creating and testing prototypes
  • Streamlining processes
  • Trialling new or substituting materials
  • Developing bespoke software
  • Trial and error
  • Industry firsts
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R&D Eligibility Examples

Within the most popular industry for R&D tax credit claims, Manufacturing and Engineering, examples of eligible R&D activities include:

  • Creating or developing new products or processes
  • Adapting to changes in legislation or industry requirements, including energy efficiency and reducing carbon emissions
  • Developing a new and innovative approach to manufacturing, engineering and foundries systems
  • Bespoke solutions
  • Manufacturing prototypes, pilot runs and testing
  • Developing or creating new composite materials
  • Trialling and developing systems to potentially improve performance, cost-efficiency or methodology

We illustrate case studies to give business owners an idea of which activities can be claimed for and how much you can earn in R&D tax relief.

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Is R&D tax credits eligibility changing?

For accounting periods up to March 31 2024, the R&D tax structure consisted of two schemes: SME, intended for smaller companies, and RDEC, which is mostly for larger companies consisting of more than 500 members of staff.

From April 1 2024, the two schemes will be merged with one set of rules. However, there are new qualifying rules for subcontracted and subsidised R&D, which was previously only exclusive to those claiming through the RDEC scheme.

Further to this change, the threshold for R&D intensity has been lowered from 40% to 30%, which means more companies can benefit from higher rates of relief. There are, however, new restrictions on overseas R&D expenditure.

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No matter what your circumstances are…

…we can help you to submit your claim to HMRC and receive thousands of pounds in tax relief or as a cash lump sum.

Whether profitable or operating at a loss, both SMEs and large companies can claim R&D tax credits either through the SME scheme or the RDEC scheme. Your business needs to be a UK limited trading company with a set of financial accounts and qualifying spend to claim back R&D eligible expenditure.

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R&D Explained

What qualifies as R&D expenditure and what sectors could typically benefit from tax relief?
A close-up of a calculator, symbolizing the process of calculating R&D claims. The image emphasizes precision and attention to detail in the financial aspects of research and development activities.

Who can claim?

What activities can qualify as Research and Development expenditure?
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Why use a specialist?

As one of the UK’s leading R&D tax credits specialists, our aim is to make the process as simple as possible

UK businesses in any industry sector can claim R&D tax credits, providing qualifying research and development activities are being carried out. If you are unsure, contact an expert to find out.

R&D can be claimed for attempts to improve an existing product or process or innovate or create a new product or process.

The main differentiator is based on company size: a company is classed as large if it consists of more than 500 members of staff. In that case, RDEC would be the appropriate scheme. For less than 500 members of staff, the SME scheme usually applies. From April 1 2024, the two schemes are merging.

There is no limit for how many R&D activities a company can claim for, providing such activities were conducted within its past two financial years. Use our R&D tax credits calculator for an indicative guide to how much relief you may be due.

Receiving a subsidy or grant does not automatically disqualify a UK business from claiming R&D tax credits, but it is vital to evaluate the specific circumstances and ensure the R&D activities meet the eligibility criteria. Contact us for expert advice.