Tax Relief for R&D 1
At Quantum Light Ltd, we understand the power of innovation. But did you know that if your business is investing in research and development—whether in software, engineering, manufacturing, or even process improvement—you could be entitled to significant tax relief from HMRC?
The UK Government’s Research and Development (R&D) Tax Credit scheme is one of the most generous in the world. It allows small and medium-sized companies to recover up to 33% of qualifying R&D expenditure, even if your company is not yet profitable.
What Qualifies as R&D?
Many business leaders assume R&D only applies to labs and white coats. In fact, the criteria are much broader. If your company is solving technical problems, developing new products, enhancing existing systems, or improving manufacturing processes, there’s a good chance you’re doing qualifying R&D—without even realising it.
Understanding Tax Credits
A Powerful Incentive for Innovation
Research and Development (R&D) Tax Credits are a UK government initiative designed to reward businesses for investing in innovation. Managed by HM Revenue & Customs (HMRC), the scheme offers substantial reliefs that can either reduce a company’s Corporation Tax liability or result in a cash refund for qualifying R&D expenditure. Since its inception in 2000, the scheme has returned billions of pounds to UK companies of all sizes.
Who Qualifies?
R&D Tax Credits are available to companies that are subject to UK Corporation Tax and that undertake qualifying R&D activities. These can range from software development, engineering, and advanced manufacturing, to scientific experiments, product development, or even the enhancement of existing systems or technologies.
Under HMRC’s definition, R&D takes place when a project seeks to:
“achieve an advance in science or technology through the resolution of scientific or technological uncertainty.”
(CIRD80100)
Importantly, your project doesn’t need to be successful to qualify—the attempt alone counts.
There are two main schemes under which R&D relief may be claimed:
SME vs. RDEC Schemes
1. SME Scheme
For companies with:
- Fewer than 500 staff
- Turnover under €100 million or balance sheet total under €86 million
Under the SME scheme, companies can deduct an extra 86% of their qualifying R&D costs from their yearly profit, in addition to the normal 100% deduction, giving a total deduction of 186%. Loss-making companies can surrender losses for a payable tax credit, worth up to 10% of the qualifying expenditure (as of the 2023 reforms).
Relevant law:
- Corporation Tax Act 2009, Part 13, Chapter 2 – Additional deduction for SMEs
- Section 1044(3) – defines qualifying conditions for SMEs
- Section 1051 – covers surrender of tax credits for cash
2. RDEC Scheme
The Research and Development Expenditure Credit (RDEC) is for:
- Large companies
- SMEs in receipt of state aid (e.g., grants) or subcontracted to perform R&D
Under RDEC, companies can claim a taxable credit of 20% (post-April 2023) of qualifying R&D costs, shown above the line in accounts—enhancing profitability indicators. This is especially useful for large corporates and public company reporting.
Relevant law:
- Corporation Tax Act 2009, Part 13, Chapter 6 – Research and Development Expenditure Credit
- Section 104A – outlines the RDEC credit and how it applies
What Counts as R&D?
HMRC sets out three criteria:
- Advance in science or technology: The work must seek to extend overall knowledge, not just your company’s.
- Scientific or technological uncertainty: This must involve doubt that competent professionals can’t readily resolve.
- Systematic, investigative, or experimental activity: Ad hoc work doesn’t qualify—it must be structured and problem-driven.
Eligible costs include:
- Staff salaries and pensions for R&D personnel
- Subcontracted R&D (SME-specific rules apply)
- Materials and consumables used in R&D
- Software licences used directly in R&D
- Utilities like power or water used in the R&D process
Costs must be revenue in nature (not capital), and must be attributable to qualifying activities.
Claim Process and Compliance
R&D claims are submitted via the Company Tax Return (CT600), and must include:
- A technical narrative (optional but strongly recommended)
- Calculations of qualifying expenditure
- Identification of qualifying projects
- Breakdown of cost categories
Since April 2023, companies must submit an Additional Information Form (AIF) to HMRC before the CT600 is filed. This form includes project descriptions, uncertainties resolved, and expenditure details.
For accounting periods beginning on or after 1 April 2024, digital filing of R&D claims through HMRC’s new portal is mandatory.
Additionally, claims must be submitted within two years of the end of the accounting period in which the R&D took place.
Key Legislative References
- CTA 2009 Part 13, Chapter 2: SME R&D relief
- CTA 2009 Part 13, Chapter 6: RDEC scheme
- CIRD Manual (CIRD80000 series): HMRC’s official guidance
- FA 2023, Sch 1: Reforms effective from April 2023, including merging of schemes and new credit rates
You can view the full legislation via legislation.gov.uk and HMRC’s manuals at gov.uk/hmrc-internal-manuals/cird
Why Use a Specialist?
R&D claims are technically and procedurally complex. Errors, omissions, or overstatements can lead to enquiries, delays, or even penalties.
That’s why at Quantum Light Ltd, our R&D Credit services are led by Bill Ritchie, a Chartered Financial Accountant with deep expertise in tax reliefs, HMRC compliance, and the technical justification process.
Bill has helped companies across engineering, software, electronics, biotech, and manufacturing recover tens of thousands of pounds—funds that fuel continued growth and innovation.
Book a Free Initial Consultation
If your company is investing in problem-solving, process development, or new tech, you could be sitting on a goldmine of recoverable costs.
Contact us now for a free, no-obligation consultation with Bill Ritchie. We’ll assess your eligibility and estimate your potential claim—quickly and confidentially.
Led by Bill Ritchie, CFA
This service is led by our trusted partner Bill Ritchie, a seasoned Chartered Financial Accountant with decades of experience helping UK companies successfully claim their rightful R&D tax credits. Bill brings an expert understanding of HMRC compliance, qualifying criteria, and submission strategy, ensuring you get the maximum refund you’re entitled to—with minimal disruption to your operations.
His work has helped founders, inventors, engineers, and software developers unlock hidden value within their businesses—while staying fully aligned with HMRC’s expectations.
A Precise, Professional Process
Our approach is detailed, rigorous, and tailored. We’ll guide you through:
- Identifying qualifying R&D projects
- Analysing eligible costs (salaries, contractors, software, materials)
- Preparing technical justifications
- Submitting to HMRC and handling all correspondence
Whether you’re a startup, scale-up, or established SME, we offer clarity and confidence throughout the process.
Book Your Free Consultation
You could be owed thousands of pounds—possibly tens of thousands—right now.
Let’s find out what’s possible for your company.
Contact us today for a free, no-obligation consultation with Bill Ritchie and the Quantum Light team.
We’ll help you claim what you deserve.
👉 Email: bill@heliosenergia.net
👉 Phone: +44 077 7970 697 613
- Tax Research & Development Capital Credits by Bill Ritchie CFA – Director of Helios Energia Ltd – — Photo by Floren Cabrera F de Teresa Copyright (c) 2025 – Helios Energia Ltd ↩︎