What the rules currently say
This is the position set out in HMRC’s guidance on the merged scheme and enhanced R&D intensive support, which was published on 18 March 2024 and last updated on 8 January 2026.
- Merged scheme: a 20% expenditure credit on qualifying R&D costs, replacing both the old SME scheme and the old RDEC, for accounting periods beginning on or after 1 April 2024.
- Enhanced R&D Intensive Support (ERIS): for loss-making SMEs whose qualifying R&D spend is at least 30% of total expenditure. An additional 86% deduction on qualifying costs, plus a payable credit of up to 14.5% of the surrenderable loss.
- The credit is taxable, so the cash you see is less than the headline rate.
Check this against the source before you act on it. Rates change at Budgets. The current guidance is R&D tax relief: the merged scheme and enhanced R&D intensive support on GOV.UK. I am not a tax adviser and this is not tax advice. Your accountant signs the claim, not me.
The test that actually decides it
Forget the word research. The question HMRC asks is whether you sought an advance in science or technology by resolving scientific or technological uncertainty, where that uncertainty could not readily have been resolved by a competent professional working in the field.
Three things follow from that wording, and they catch most people out.
- It has to be uncertain to the field, not just to you. If the answer was already known and you simply did not know it, that is learning, not R&D.
- Commercial novelty is not technical novelty. A product nobody has sold before can be built entirely from solved problems. That is not a claim.
- Failure counts. Work that did not succeed still resolved uncertainty. Plenty of valid claims sit in projects the owner wrote off.
Where the real claims usually hide
In the businesses I look at, the claimable work is rarely the thing the owner is proud of. It is the awkward integration nobody wanted to do, the performance problem that took three attempts, the data migration where the old system did not behave as documented.
Two warnings worth more than the relief
HMRC has been enquiring into R&D claims far more aggressively than it used to, and a claim that does not stand up costs you the money back plus penalties. Be wary of any adviser working on contingency who tells you the whole project qualifies. The project almost never does. Specific activities within it might.
You also have to notify HMRC in advance for many claims now. If you have never claimed before, check the notification deadline for your accounting period before you do anything else, because missing it ends the question for that year.
Related
See what other funding is currently available to UK businesses.