What Qualifies for R&D Tax Relief in the UK?
Work qualifies for UK R&D tax relief when it seeks an advance in science or technology by resolving scientific or technological uncertainty, and a competent professional in the field could not readily resolve that uncertainty. The company must also be liable to UK Corporation Tax and have incurred qualifying costs on the work.
What is the legal definition of R&D for tax?
The legal definition comes from guidelines issued by the Department for Science, Innovation and Technology, which tax law adopts. A project is R&D for tax purposes if it seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty. Activities that directly contribute to resolving that uncertainty are R&D, along with certain qualifying indirect activities such as some supporting research and maintenance.
What are the three tests in practice?
1. Is there an advance in science or technology?
An advance means an increase in overall knowledge or capability in the field, not just in your company. It can be a new product, process or service, or an appreciable improvement to an existing one. Copying something that already exists elsewhere is not an advance, even if it is new to you, unless the way it was done is not publicly known and could not readily be worked out.
2. Was there scientific or technological uncertainty?
Uncertainty exists when knowledge of whether something is possible, or how to achieve it, is not readily available or deducible by a competent professional. Commercial uncertainty, such as whether customers will buy, does not count. Nor does uncertainty that is simply about cost or time when the technical route is known.
3. Would a competent professional find it hard?
A competent professional is someone with knowledge and experience of the relevant field who is up to date with current practice. If such a person could solve the problem with existing knowledge, it is routine. Your claim is stronger when the competent professional is identified by name and their reasoning is recorded.
What does not count as R&D?
- Work in the arts, humanities and social sciences, including economics, unless it directly supports a scientific or technological project
- Commercial and financial steps such as market research, sales and fundraising
- Routine testing, quality control and adapting existing products in known ways
- Cosmetic and aesthetic changes
- Work after the uncertainty was resolved, such as production and rollout
When does R&D start and stop?
R&D starts when work begins to resolve the uncertainty, which can include planning and feasibility directly tied to it. It stops when the uncertainty is resolved or the work is abandoned. Many claims are challenged because they include the whole commercial project rather than the uncertain phase within it.
Does the company have to be profitable or large?
No. Loss-making companies can receive a payable credit, and company size changes which scheme applies, not whether you qualify. The company must be within the charge to UK Corporation Tax, so sole traders and partnerships cannot claim.
Does mathematics count?
Since April 2023, advances in pure mathematics count as R&D for tax purposes, and costs on mathematical work that seeks such an advance can qualify.
How can you test your own projects?
Write one paragraph per project answering: what was the state of the art when you started, what did you need to achieve that it could not, why was the route uncertain, and what did you try. If you cannot write that paragraph, the project probably is not R&D, or it needs a specialist to help find the real uncertainty. Our sector guides give examples.
Sources
Worked examples: qualifying or not?
These examples show how the same type of project can fall either side of the line. They are illustrations, not rulings, and every claim depends on its own facts.
| Project | Likely to qualify when | Unlikely to qualify when |
|---|---|---|
| New SaaS platform | The team had to devise a new method to synchronise data across systems at a scale existing tools could not handle | The platform was built with standard frameworks and documented integrations |
| Machine learning model | The team developed a new training approach because known methods failed on sparse, noisy data | The team fine-tuned a commercial model through its API using documented steps |
| Food reformulation | Reducing sugar caused instability that known techniques could not fix, so new formulations were tested | A new flavour was created using established recipes |
| Manufacturing line | Achieving a tighter tolerance needed experimental tooling and process trials | A new machine was installed and commissioned to the supplier's specification |
| Building project | Ground conditions required a foundation solution that had to be designed and tested | The design followed standard codes and established methods |
| Medical device | Miniaturising a sensor created signal problems with no known solution | The work was regulatory documentation for an existing device |
What are qualifying indirect activities?
Qualifying indirect activities are supporting tasks that form part of an R&D project without directly resolving the uncertainty. The guidelines list them. They include scientific and technical information services such as preparing research reports, indirect supporting activities such as maintenance, security and administration that serve the R&D, ancillary activities like training needed to support the project, and some feasibility studies. Staff time spent on these can be included, but routine activities that would happen anyway, such as general HR or payroll, cannot.
Who counts as a competent professional?
A competent professional is someone with the knowledge and experience to understand the field and know whether a problem is routine. In practice it is often your chief technology officer, lead engineer or head of science. They do not need a formal qualification, but they must be up to date with the field. HMRC expects their reasoning to be visible in the claim: what was known, what was not, and why the problem was hard. Naming them in the claim and having them review the technical narrative strengthens it.
How does the systematic approach fit in?
Many guides describe a fourth test: that the company followed a systematic approach to resolving the uncertainty. The guidelines do not use that phrase as a separate legal test, but evidence of a methodical process, such as hypotheses, experiments, tests and iteration, is the strongest way to show that work was genuine R&D rather than trial and error on routine tasks. Keeping simple records of what you tried and why is the best evidence.
What about R&D done for customers?
For accounting periods from April 2024, who claims depends on who decides to carry out the R&D. If your customer intended or contemplated R&D when it placed the contract, the customer is generally the one that claims, not you. If you take on a fixed price job and decide yourself to solve a technical problem through R&D, you may be able to claim. Contracts and statements of work are the key evidence.
Does it matter where the R&D happens?
Your own staff can do R&D anywhere, but from April 2024 the costs of contracted-out R&D and externally provided workers generally only qualify if the work is done in the UK or the workers are on UK payroll. There is a narrow exception where conditions needed for the R&D, such as geography, environment, population, or legal or regulatory requirements, are not present in the UK. Wanting lower costs or easier recruitment is not enough.
A simple self-check
- Is the company liable to UK Corporation Tax?
- Can you describe what the field could and could not do when the project started?
- Was there something you needed to achieve that a competent professional could not readily work out?
- Did you try approaches, test them and learn from failures?
- Can you separate the uncertain phase from routine work before and after it?
- Did the company bear the costs, rather than a customer or grant body paying for the R&D itself?
If you answer yes to all six, the project is worth discussing with a specialist. If you are unsure about any of them, a specialist can help, or you can use HMRC's targeted advance assurance to get a view on whether a project meets the definition.
Common myths
- “Only labs and universities can claim.” Most claims come from manufacturing, software and professional services firms.
- “The project must succeed.” Failed projects can qualify.
- “New to us means R&D.” The advance must be in the field, not just in your company.
- “All developers' time counts.” Only time spent on qualifying activity counts.
- “A patent is needed.” Patents are not required for R&D relief.
Source for the definition: guidelines on the meaning of R&D for tax purposes.
How does HMRC check whether work qualifies?
HMRC checks eligibility by comparing what the claim says with the guidelines and with evidence. A caseworker will read the project descriptions in the Additional Information Form, compare them with the costs claimed, and decide whether to open a compliance check. In a check, HMRC may ask for interviews with your technical staff, technical documents and an explanation from your competent professional. HMRC has an expert advisory panel to support caseworkers on technical areas such as AI, life sciences and manufacturing.
What questions might an HMRC officer ask?
- What was the state of knowledge in the field when the project started, and how do you know?
- What exactly could a competent professional not readily work out?
- What approaches did you try, and what happened?
- When was the uncertainty resolved, and what work followed?
- Who decided the work was R&D, and what are their qualifications or experience?
- How did you decide how much of each person's time was R&D?
If your team can answer these clearly for each project, the claim is in good shape.
How does R&D look in different fields?
Physical sciences and engineering: new materials, processes, devices and systems where performance or behaviour could not be predicted. Biological sciences: research into living systems, from drug targets to crop traits. Computer science and software: advances in algorithms, architectures, data handling and security, not routine application building. Mathematics: since April 2023, advances in pure mathematics count. In every field, the test is the same: an advance sought by resolving uncertainty a competent professional could not readily resolve.
What evidence best supports eligibility?
The best evidence is created during the project, not afterwards. Useful examples include project plans that state the technical goal, design documents comparing options, test plans and results, lab notebooks, code repositories with commit history, meeting notes recording technical decisions, and reports on failed approaches. You do not need all of these, but a claim with none is hard to defend.
Next steps
If your projects pass the self-check above, gather a short description of each one and a rough figure for the costs involved, then speak to a specialist. If you are unsure, our sector guides show what qualifies in your field, and our qualifying costs guide explains what you can include.
Frequently asked questions
Can a failed project qualify?
Yes. What matters is that the project sought an advance by resolving uncertainty, not whether it succeeded.
Can we claim if the work is new to us but not to the industry?
Usually not. The advance must be in overall knowledge or capability in the field, not just for your company.
Can sole traders claim R&D tax relief?
No. The relief is for companies within the charge to UK Corporation Tax.
Get matched with a vetted R&D tax specialist
Tell us what you do and roughly what you spend on development. We check the basics, then introduce you to a specialist from our panel whose sector experience fits your work.
- Free to use, with no obligation to appoint anyone
- Introductions only to firms that meet our panel criteria
- Fee terms in writing from the firm before you sign anything
- We flag claim deadlines we can see from your answers
Our matching service is free for businesses. Specialist firms on our panel pay us a fee when we introduce a business to them. That fee does not change the price a firm quotes you, and you are never obliged to appoint anyone we introduce.