R&D Tax Relief (UK): Complete 2025 Guide to Claiming, Rates, Eligibility & How to Apply

Innovation takes investment — and in the UK, the government rewards that investment through R&D tax relief. This incentive helps companies offset the cost of research and development by reducing Corporation Tax or, in some cases, providing a cash credit.
But the rules have changed. Since 1 April 2024, most claims fall under a merged R&D scheme, and specific relief exists for R&D-intensive SMEs under the Enhanced R&D Intensive Support (ERIS) scheme. Companies must also meet stricter compliance requirements, including mandatory submission of an Additional Information Form (AIF) and, in some cases, filing a Claim Notification Form within six months after the end of the period of accounts.

This guide explains what R&D tax relief is, who qualifies, the rates in 2025, and how to prepare a strong claim that stands up to HMRC scrutiny.

Quick Answers: R&D Tax Relief at a Glance

What is R&D tax relief?
It’s a UK scheme that allows companies to claim back a portion of their qualifying R&D costs. From April 2024, most companies claim under the merged scheme, which provides a 20% expenditure credit that is taxable.
What are the current rates?
The merged scheme offers a 20% expenditure credit. For R&D-intensive loss-making SMEs, ERIS provides enhanced support worth up to £27 back for every £100 spent.
Who qualifies?
Any UK company within the charge of Corporation Tax that undertakes projects seeking an advance in science or technology, tackling technical uncertainty not easily solved by a competent professional.
Do I need to notify HMRC?
Yes, if it’s your first claim or if you haven’t claimed in more than three years. The Claim Notification Form must be submitted within six months after the end of the relevant accounting period.
What else must be filed?
Every claim now requires an Additional Information Form (AIF) detailing projects, uncertainties, and costs.

How R&D Tax Relief Works in 2025

For accounting periods beginning on or after 1 April 2024, most businesses must claim under the merged R&D scheme. This scheme:

Provides an expenditure credit of 20%, which is taxable.
Places the credit “above the line” in company accounts, improving visibility of R&D benefit.
Applies to both large companies and SMEs, replacing the older SME and RDEC schemes.

Alongside this, the ERIS scheme offers enhanced support for loss-making R&D-intensive SMEs. To qualify, at least 30% of the company’s total expenditure must be on R&D. For eligible companies, ERIS can return up to £27 for every £100 of qualifying spend.

Who Is Eligible?

To qualify for R&D tax relief, a company must:

Be subject to UK Corporation Tax.
Undertake projects that aim to achieve an advance in science or technology.
Face technical uncertainty that could not be solved by a competent professional in the field.

Examples of eligible activities include:

Developing new software, products, or processes.
Improving existing technologies where the solution was not straightforward.
Conducting laboratory trials or prototype development.
Engineering projects pushing beyond what is currently known.

Non-qualifying activities include:

Aesthetic or cosmetic design changes.
Routine testing or quality control.
Pure market research or commercial activities.
Activities where the outcome was already known.

What Costs Can You Claim?

R&D tax relief is not just about lab coats and test tubes. Many types of expenditure qualify, provided they are directly related to the R&D activity.
You can claim for:

Staffing costs such as salaries, NICs, and pensions.
Externally provided workers and subcontractors (with restrictions).
Consumables and materials used or transformed in R&D.
Software and cloud computing costs directly used in R&D projects.
Data and mathematical costs, where relevant.
Clinical trial volunteers, if applicable.

Exclusions include capital expenditure (though R&D allowances may apply separately), production costs, and commercial sales activity.

The Merged Scheme vs ERIS

The merged scheme applies to most companies from April 2024. It provides a 20% expenditure credit that is taxable. The net benefit depends on whether the company is profitable or loss-making and what rate of Corporation Tax applies.
ERIS (Enhanced R&D Intensive Support) applies only to loss-making SMEs that meet the 30% R&D intensity test. These businesses can claim a significantly higher payable credit, improving cash flow and supporting ongoing innovation.
For companies near the threshold, careful calculation is essential to determine whether ERIS applies.

What if My Company Is Loss-Making?

Loss-making businesses often assume they cannot benefit from R&D tax relief because they are not paying Corporation Tax. In reality, R&D incentives can be especially valuable in these cases.

Under the merged scheme, loss-making companies can surrender their expenditure credit for a payable cash benefit. This helps improve liquidity even if the business is pre-revenue.
For R&D-intensive SMEs that meet the 30% test, ERIS provides even greater support — offering up to £27 back for every £100 spent on qualifying R&D. This is designed to keep innovative startups and scale-ups investing, even during early years of losses.
The key advantage for loss-makers is cash flow. Instead of reducing a Corporation Tax bill, the scheme can generate a direct cash injection, which can be reinvested into growth and further R&D.

This makes R&D tax relief particularly attractive for startups, biotech companies, software developers, and other early-stage businesses where losses are common in the first few years.

Deadlines, Notifications, and the AIF

Claiming R&D tax relief is no longer just ticking a box. There are now mandatory steps in the process.

Claim Notification Form: If you are a first-time claimant or haven’t claimed in more than three years, you must submit a Claim Notification Form. This form must be filed within six months after the end of the period of accounts in which the R&D took place. Missing this deadline invalidates the claim for that accounting period.
Additional Information Form (AIF): Mandatory for every claim. It requires detailed narratives describing the R&D projects, the scientific/technological uncertainties faced, and a full breakdown of costs.
Claim submission window: R&D claims must still be made within two years of the end of the relevant accounting period, but the notification and AIF requirements add additional deadlines that businesses must meet.

Step-by-Step: How to Claim R&D Tax Relief

Check eligibility against HMRC’s definition of R&D.
Identify qualifying projects that sought scientific or technological advances.
Gather evidence including project notes, technical documents, and uncertainty descriptions.
Compile costs such as staffing, subcontractors, software, and consumables.
Check grant funding to ensure it doesn’t restrict your route to relief.
Calculate the benefit under the merged scheme or ERIS.
Prepare the AIF with project narratives and cost breakdowns.
Submit the Claim Notification Form if required, within six months after the end of the period of accounts.
File the claim through the company’s Corporation Tax return (CT600).
Retain records in case of HMRC enquiry.

Common Pitfalls

Many claims fail or face HMRC challenge because of avoidable mistakes. The most common pitfalls include:

Writing vague technical narratives without demonstrating uncertainty.
Treating routine software development or integration as R&D without justification.
Failing to apportion staffing or subcontractor costs properly.
Missing deadlines for the Claim Notification or AIF.
Ignoring the effect of grants or subcontracting rules.

Record-Keeping Requirements

HMRC expects clear, contemporaneous evidence. This includes:

Technical documents, lab records, sprint notes, or design drafts.
Time-tracking or cost allocation records for staff and subcontractors.
Subcontractor agreements and project scopes.
Supporting evidence for consumables and software licences.

Companies should retain these records for the statutory period, as claims may be reviewed years later.

How Persona Finance Helps

Filing an R&D tax relief claim is not just about crunching numbers — it requires strong narratives, clear cost analysis, and compliance with HMRC’s strict process.
At Persona Finance, we:

Assess eligibility and identify qualifying projects.
Draft clear technical narratives aligned with HMRC’s definition.
Analyse costs and maximise the benefit within the rules.
Prepare and file the Additional Information Form and Claim Notification.
Support you through any HMRC queries.

👉 Book a free R&D review today and let our accountants handle your claim with precision.

FAQs

What counts as R&D for HMRC?
Any project seeking an advance in science or technology and tackling technical uncertainty not easily solved by a competent professional.
What are the current R&D rates?
The merged scheme offers a 20% expenditure credit, while ERIS offers enhanced credits worth up to £27 per £100 of spend for qualifying SMEs.
Do I need to notify HMRC before claiming?
Yes—if you’re a first-time claimant or haven’t claimed in the last three years. The Claim Notification Form must be submitted within six months after the end of the period of accounts.
What is the AIF?
The Additional Information Form is mandatory for all claims and provides HMRC with detailed project and cost information.
Can software projects qualify?
Yes, if they involve attempts at technological advancement and address genuine technical uncertainties.

Conclusion

R&D tax relief remains one of the UK’s most valuable incentives, but the rules are tighter than ever. The merged scheme and ERIS provide meaningful benefits, yet compliance requires careful planning, evidence, and timely filing.
Handled properly, R&D tax relief can significantly reduce your tax bill or provide a cash injection to fund future innovation. Handled poorly, it can trigger HMRC enquiries or disallowed claims.
At Persona Finance, we simplify the process and safeguard your benefit. Contact us today for expert support with your R&D tax relief claim.
👉 Book your free R&D consultation now and maximise your claim with confidence.