R&D Tax Relief 2026/27: Do You Qualify?

Q: What is R&D tax relief?

R&D (research and development) tax relief is a UK government incentive that lets companies reduce their Corporation Tax bill — or receive a cash credit — for money spent on qualifying R&D. It is designed to reward work that seeks to achieve an advance in science or technology by resolving scientific or technological uncertainty.

Q: What is the deadline to claim R&D tax relief?

An R&D claim must generally be made within two years of the end of the accounting period it relates to. For an accounting period ending 31 March 2025, for example, the claim deadline is 31 March 2027. The advance notification window (six months after the period end) is much tighter and applies to first-time or lapsed claimants.

R&D tax relief is one of the most valuable incentives available to UK companies — and one of the most misunderstood. Many businesses that qualify never claim, assuming "R&D" means people in lab coats. Others claim incorrectly and face HMRC scrutiny. Since April 2024 the rules have changed substantially: the old SME and RDEC schemes have merged into a single scheme, and the compliance bar has risen sharply. This guide explains what R&D tax relief is, who qualifies in 2026/27, which costs you can claim, and how to make a claim that stands up.

In short: R&D tax relief lets UK companies reduce their Corporation Tax — or get a cash credit — for money spent on work that seeks an advance in science or technology. For accounting periods from 1 April 2024, most companies claim under the merged scheme at a 20% above-the-line credit (about 15% net). Loss-making, R&D-intensive SMEs may claim more generously under ERIS. Every claim now needs an Additional Information Form, and some companies must notify HMRC in advance.

What R&D tax relief is

R&D tax relief is a government incentive designed to encourage innovation by making it cheaper for companies to invest in research and development. It works in one of two ways: it reduces the Corporation Tax a profitable company pays, or it gives a loss-making company a payable cash credit. Either way, it rewards businesses for spending on projects that seek to advance science or technology.

The crucial point most businesses miss is how broad "R&D" actually is for tax purposes. It is not limited to laboratories or white coats. Software development, engineering, manufacturing process improvement, product design and many other fields can qualify — provided the work meets HMRC's definition of seeking a genuine technological or scientific advance.

What changed: the merged scheme from April 2024

This is the single most important thing to understand if you have claimed before. For accounting periods beginning on or after 1 April 2024, the two separate regimes — the SME scheme and the RDEC (R&D Expenditure Credit) scheme — were combined into a single merged scheme, built on the RDEC model.

Under the merged scheme, all companies (large and small) claim an above-the-line expenditure credit at 20% of qualifying R&D spend. Because that credit is itself subject to Corporation Tax, the net benefit for a company paying the 25% main rate is around 15% of qualifying expenditure. For SMEs that previously used the more generous old SME scheme, this generally means a lower headline rate than before — so if you are budgeting on old figures, revisit them.

📌 Which period are you in?

Periods beginning on or after 1 April 2024: merged scheme (or ERIS if you qualify).
Periods beginning before 1 April 2024: the old SME or RDEC scheme still applies to that period — so you may still be making legacy claims for a while.

A PAYE/NIC cap also limits the payable amount under both schemes — broadly £20,000 plus 300% of the company’s relevant PAYE and NIC liabilities for the period, unless an exemption applies.

ERIS: enhanced support for R&D-intensive SMEs

Alongside the merged scheme, there is more generous relief for loss-making SMEs that are heavily focused on R&D. This is Enhanced R&D Intensive Support (ERIS).

To qualify for ERIS, an SME must be loss-making for tax purposes and meet the R&D intensity condition — its relevant R&D expenditure must be at least 30% of total expenditure (including that of connected companies). That threshold was reduced from 40% to 30% for periods beginning on or after 1 April 2024, which brought more companies into scope.

Under ERIS, a qualifying company can deduct an extra 86% of its qualifying R&D costs in calculating its trading loss (on top of the normal 100% deduction, a 186% total), and then claim a payable tax credit worth up to 14.5% of the surrenderable loss. That payable credit is not itself liable to tax — which is what makes ERIS considerably more generous than the standard merged scheme for loss-making, research-heavy businesses that are not yet profitable.

⚠ Don't claim the wrong rate

Claiming the enhanced ERIS rate without genuinely meeting the strict 30% intensity threshold is a common and serious error. If HMRC disagrees, the claim can be denied and clawed back. Grant funding can also push your R&D intensity ratio below 30%, so model it carefully before filing.

Want a quick estimate of your claim?

Use our free R&D Tax Relief Estimator to see your potential benefit under the merged scheme or ERIS.

Try the R&D Calculator →

What counts as qualifying R&D

This is where claims are won or lost. To qualify, a project must seek an advance in a field of science or technology by resolving scientific or technological uncertainty — uncertainty that a competent professional in the field could not readily resolve using existing knowledge or techniques.

HMRC assesses this project by project, not across a whole product. A few principles help:

The advance must be in the field generally, not just new to your company.
There must be genuine uncertainty — if the solution was straightforward for a competent professional, it does not qualify.
Using existing technology to solve a business problem is not the same as advancing it. For example, applying an off-the-shelf AI tool is not R&D; resolving a genuine technical uncertainty in AI itself can be.
Commercial novelty (a new product to market) is not the same as technological advance — the test is technical, not commercial.

Which costs you can claim

Once you have identified qualifying projects, you can include the qualifying costs attributable to the R&D. Broadly, these are:

Staff costs — salaries, employer's NIC and pension contributions for people directly working on the R&D, apportioned to their R&D time.
Externally provided workers — agency or third-party staff working on the R&D (subject to restrictions).
Subcontractor costs — now subject to UK-territory restrictions, and with new rules on who in a contracting chain is entitled to claim.
Consumables — materials and a proportion of utilities (power, water, fuel) used up in the R&D process.
Software, data and cloud computing — including certain data licence and cloud costs used for the R&D.

⚠ Overseas restrictions

A major change under the merged scheme: relief for payments to overseas subcontractors and externally provided workers is generally no longer available where the work is done outside the UK, with limited exceptions. If your R&D relies on overseas teams, the position needs careful review.

How to make a compliant claim

The relief is valuable, but HMRC has tightened compliance significantly, and the administrative steps now matter as much as the numbers. Get these wrong and the claim can be lost entirely:

Claim notification. If you are a first-time claimant — or your last claim was more than three years before the last date of the claim notification period — you must submit a claim notification form. The window ends six months after the end of the period of account. Miss it and the R&D claim for that period is invalid. (This requirement applies to periods beginning on or after 1 April 2023.)
Additional Information Form (AIF). Every claim must be supported by an AIF — naming a senior officer, describing the R&D, and breaking down the qualifying costs — submitted before or at the same time as the CT600. File a return claiming R&D without a linked AIF and HMRC will automatically strip the claim out, often with no grace period.
The CT600 claim itself, made within two years of the end of the accounting period.
Advance assurance (optional) — SMEs can apply to HMRC for advance assurance that a claim will be accepted, which can be reassuring for first-time claimants.

HMRC scrutiny of R&D claims has increased markedly. A well-evidenced claim — clear on the technological uncertainty, the competent professional's view, and the cost breakdown — is far more robust than a thin one. This is an area where getting the technical narrative right genuinely matters.

⚡ Key takeaways

R&D tax relief rewards work that seeks a genuine advance in science or technology — far broader than lab research, but strictly a technical (not commercial) test.
From April 2024, most companies claim under the merged scheme: a 20% above-the-line credit, around 15% net.
Loss-making SMEs spending 30%+ of total costs on R&D may claim the more generous ERIS.
Every claim needs an Additional Information Form before the CT600 — or HMRC removes it automatically.
First-time or lapsed claimants must notify HMRC within six months of the period end, or lose the claim.

Frequently asked questions

What is R&D tax relief?

R&D tax relief is a UK government incentive that lets companies reduce their Corporation Tax bill — or receive a cash credit — for money spent on qualifying R&D. It rewards work that seeks an advance in science or technology by resolving scientific or technological uncertainty.

Which R&D scheme applies in 2026/27?

For accounting periods beginning on or after 1 April 2024, the separate SME and RDEC schemes were replaced by a single merged scheme based on the RDEC model. Most companies claim an above-the-line credit at 20% of qualifying spend (about 15% net after Corporation Tax). Loss-making R&D-intensive SMEs may instead claim under ERIS.

What is ERIS and who qualifies?

Enhanced R&D Intensive Support (ERIS) is for loss-making SMEs whose relevant R&D expenditure is at least 30% of total expenditure (the threshold was reduced from 40% to 30% for periods beginning on or after 1 April 2024). It allows an extra 86% deduction of qualifying costs (186% in total) and a payable tax credit worth up to 14.5% of the surrenderable loss, which is not liable to tax — more generous than the standard merged scheme.

What counts as qualifying R&D?

The work must seek an advance in a field of science or technology by resolving uncertainty that a competent professional could not easily work out. It is assessed project by project. Routine work, or simply applying existing technology to a business problem, does not qualify — using an existing AI tool is not the same as advancing AI itself.

Which costs can I include in an R&D claim?

Qualifying costs typically include staff costs for those directly working on the R&D, a proportion of externally provided workers, subcontractor costs (now subject to UK-territory restrictions), consumables such as materials and a share of utilities, software, and certain data and cloud computing costs. Restrictions now apply to overseas subcontractors and externally provided workers.

What is the Additional Information Form and why does it matter?

Since August 2023, every R&D claim must be supported by an Additional Information Form (AIF) submitted before or with the CT600. If you file a return claiming R&D relief without a linked AIF, HMRC will automatically remove the claim — often with no grace period. It requires a named senior officer, a description of the R&D, and a cost breakdown.

Do I need to notify HMRC in advance?

Possibly. Companies making their first R&D claim — or whose last claim was more than three years before the last date of the claim notification period — must submit a claim notification form. The window closes six months after the end of the period of account. Miss it and the R&D claim for that period is invalid. This applies to periods beginning on or after 1 April 2023.

What is the deadline to claim R&D tax relief?

A claim must generally be made within two years of the end of the accounting period it relates to. For a period ending 31 March 2025, the deadline is 31 March 2027. The advance notification window (six months after period end) is much tighter and applies to first-time or lapsed claimants.

Disclaimer: This article is general information about R&D tax relief as it applies in 2026/27, not advice tailored to your company. R&D claims are technical and fact-specific, and HMRC scrutinises them closely. Please get in touch for advice on your own R&D position before making a claim.

R&D Tax Relief 2026/27:Do You Qualify and How to Claim