{"id":6172,"date":"2026-04-22T10:04:30","date_gmt":"2026-04-22T10:04:30","guid":{"rendered":"https:\/\/ttaccountancy.com\/blog\/?p=6172"},"modified":"2026-04-24T09:56:43","modified_gmt":"2026-04-24T09:56:43","slug":"rd-tax-credits-after-the-hmrc-reforms-can-your-uk-sme-still-claim","status":"publish","type":"post","link":"https:\/\/ttaccountancy.uk\/blog\/rd-tax-credits-after-the-hmrc-reforms-can-your-uk-sme-still-claim\/","title":{"rendered":"R&amp;D Tax Credits After the HMRC Reforms: Can Your UK SME Still Claim?"},"content":{"rendered":"\n<h2>Introduction<\/h2>\n\n\n\n<p>R&amp;D tax credits have long been one of the most generous reliefs available to UK small businesses \u2014 and one of the most misunderstood. But the landscape changed dramatically from April 2024, when HMRC merged the long-standing SME R&amp;D scheme and the Research and Development Expenditure Credit (RDEC) into a single merged scheme.<\/p>\n\n\n\n<p>For many SMEs, the reforms came as a shock. Rates changed, qualifying criteria tightened, and the administrative requirements became significantly more demanding. If your business has been claiming R&amp;D relief \u2014 or has been wondering whether it qualifies \u2014 this guide explains exactly where things stand in 2026.<\/p>\n\n\n\n<h2>What Is R&amp;D Tax Relief and Why Does It Exist?<\/h2>\n\n\n\n<p>R&amp;D tax credits are a government incentive designed to encourage UK businesses to invest in innovation. If your company carries out qualifying research and development activities, you can claim a reduction in your Corporation Tax bill or, in some circumstances, receive a cash repayment from HMRC \u2014 even if you made a loss.<\/p>\n\n\n\n<p>The relief exists because innovation is expensive and risky, and the government wants to encourage UK businesses to invest in it rather than buy off-the-shelf solutions from overseas.<\/p>\n\n\n\n<h2>The Merged Scheme \u2014 What Changed in April 2024<\/h2>\n\n\n\n<p>Prior to April 2024, UK businesses could claim under either the SME R&amp;D scheme (more generous rates, available to smaller companies) or RDEC (available to large companies and SMEs in certain circumstances). From April 1 2024, these were replaced by a single merged scheme with a uniform rate of 20% above-the-line credit for most companies.<\/p>\n\n\n\n<p>There is one significant exception: loss-making SMEs that are considered R&amp;D intensive \u2014 meaning their qualifying R&amp;D expenditure represents 30% or more of their total expenditure \u2014 can still claim under an enhanced scheme with a notional tax credit of 27%. This is known as the Enhanced R&amp;D Intensive Support (ERIS) scheme.<\/p>\n\n\n\n<p>For profitable SMEs that were previously claiming under the old SME scheme (which offered a 130% super-deduction on qualifying costs), the effective value of the relief has reduced. This is the most significant practical impact of the reform for many SMEs.<\/p>\n\n\n\n<h2>What Qualifies as R&amp;D Under the New Rules?<\/h2>\n\n\n\n<p>The definition of qualifying R&amp;D has not fundamentally changed, but HMRC has significantly tightened how it reviews claims. Qualifying R&amp;D must:<\/p>\n\n\n\n<ul>\n<li>Seek to achieve an advance in science or technology \u2014 not just in your own knowledge, but objectively in the field<\/li>\n\n\n\n<li>Involve a genuine scientific or technological uncertainty that a competent professional in the field could not resolve without experimentation<\/li>\n\n\n\n<li>Involve systematic investigation or experimentation \u2014 trial and error, prototyping, iterative development<\/li>\n<\/ul>\n\n\n\n<p>Crucially, the advance does not have to succeed. Failed R&amp;D projects can still qualify \u2014 provided the uncertainty and the systematic investigation genuinely existed.<\/p>\n\n\n\n<p>Activities that do not qualify include: routine software maintenance, applying established techniques to new products, market research, and quality control processes.<\/p>\n\n\n\n<h2>What Costs Can You Include in Your Claim?<\/h2>\n\n\n\n<p>Qualifying expenditure under the merged scheme includes:<\/p>\n\n\n\n<ul>\n<li>Staff costs: salaries, employer National Insurance, and pension contributions for employees directly engaged in R&amp;D (and a proportion for supervisory staff)<\/li>\n\n\n\n<li>Subcontractor costs: payments to third parties carrying out R&amp;D on your behalf (now subject to a 65% cap on qualifying subcontractor costs in some cases)<\/li>\n\n\n\n<li>Materials and consumables used in the R&amp;D process<\/li>\n\n\n\n<li>Cloud computing and data costs directly attributable to R&amp;D activity<\/li>\n\n\n\n<li>A proportion of software licence costs<\/li>\n<\/ul>\n\n\n\n<p>Staff costs typically form the largest component of most SME R&amp;D claims and are often underestimated \u2014 particularly where employees divide their time between R&amp;D and non-R&amp;D activities.<\/p>\n\n\n\n<h2>The New Administrative Requirements You Cannot Ignore<\/h2>\n\n\n\n<p>HMRC has significantly increased scrutiny of R&amp;D claims in response to widespread abuse of the old schemes. Under the current rules:<\/p>\n\n\n\n<ul>\n<li>All companies making an R&amp;D claim for the first time must notify HMRC in advance using a Claim Notification Form \u2014 failure to do this before the deadline makes the claim invalid<\/li>\n\n\n\n<li>Claims must be accompanied by an Additional Information Form (AIF) with a detailed technical narrative describing the R&amp;D project, the advance sought, the uncertainty encountered, and how it was addressed<\/li>\n\n\n\n<li>HMRC now routinely opens enquiries into R&amp;D claims \u2014 having a well-documented technical and financial narrative is no longer optional<\/li>\n<\/ul>\n\n\n\n<p><strong>Important: <\/strong>HMRC has publicly stated that it considers many agent-led R&amp;D claims to be inaccurate or fraudulent. Using a reputable accountant who understands both the technical and tax aspects of R&amp;D \u2014 rather than a specialist R&amp;D claims firm operating on a pure contingency basis \u2014 significantly reduces your enquiry risk.<\/p>\n\n\n\n<h2>Common Mistakes That Get Claims Rejected<\/h2>\n\n\n\n<ul>\n<li>Claiming for activities that represent routine product improvement rather than genuine technological uncertainty<\/li>\n\n\n\n<li>Including all staff costs without apportioning for time spent outside R&amp;D activities<\/li>\n\n\n\n<li>Missing the Claim Notification Form deadline for first-time claimants<\/li>\n\n\n\n<li>Submitting a thin or generic technical narrative that does not describe the actual uncertainty resolved<\/li>\n\n\n\n<li>Overclaiming subcontractor costs beyond the allowable threshold<\/li>\n<\/ul>\n\n\n\n<h2>Is It Still Worth Claiming?<\/h2>\n\n\n\n<p>Yes \u2014 for most innovative SMEs, R&amp;D tax credits remain one of the most valuable reliefs available. A profitable SME spending \u00a3200,000 on qualifying R&amp;D staff costs can reduce its Corporation Tax bill by \u00a340,000 under the merged scheme. For loss-making R&amp;D-intensive SMEs, the ERIS cash credit can be significant.<\/p>\n\n\n\n<p>The key is to claim correctly, document thoroughly, and work with an adviser who understands HMRC&#8217;s current expectations. The era of loose, retrospective claims built around inflated staff hours is over \u2014 but for businesses doing genuine innovation, the relief remains highly valuable.<\/p>\n\n\n\n<h2>Next Steps<\/h2>\n\n\n\n<p>If your business is investing in new technology, software, processes, or products and you have not yet explored R&amp;D tax credits \u2014 or if you have been claiming and want to ensure your claims are defensible under HMRC&#8217;s current approach \u2014 speak to our team. We can assess your eligibility, calculate your potential claim, and prepare a fully documented submission that stands up to scrutiny.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction R&amp;D tax credits have long been one of the most generous reliefs available to UK small businesses \u2014 and one of the most misunderstood. But the landscape changed dramatically from April 2024, when HMRC merged the long-standing SME R&amp;D scheme and the Research and Development Expenditure Credit (RDEC) into a single merged scheme. For [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5981,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_mi_skip_tracking":false,"_mbp_gutenberg_autopost":false},"categories":[126],"tags":[],"_links":{"self":[{"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/posts\/6172"}],"collection":[{"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/comments?post=6172"}],"version-history":[{"count":1,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/posts\/6172\/revisions"}],"predecessor-version":[{"id":6173,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/posts\/6172\/revisions\/6173"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/media\/5981"}],"wp:attachment":[{"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/media?parent=6172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/categories?post=6172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ttaccountancy.uk\/blog\/wp-json\/wp\/v2\/tags?post=6172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}