R & D Tax Credits

R&D tax relief allows companies to claim back a proportion of the cost of developing new products, processes or systems.

Following changes introduced from April 2024, the regime is now more complex and subject to increased HMRC scrutiny. A well-prepared claim is essential to secure the relief and avoid challenge.

Cunningtons provides practical, end-to-end support, ensuring claims are robust, compliant and commercially focused.

What qualifies as R&D?

R&D for tax purposes is wider than many businesses expect.

A claim may be available where your business is seeking to:

• Achieve an advance in science or technology
• Resolve technical uncertainties
• Develop solutions that are not readily deducible by a competent professional

This can arise in a range of sectors, including:

• Manufacturing and engineering
• Construction and building services
• Software and technology
• Specialist production and process-driven industries

Projects do not need to succeed to qualify. However, work that is purely commercial, aesthetic or routine will not be eligible.

Qualifying expenditure

Relief is available on a range of costs directly linked to R&D activity, including:

• Staff costs (salary, NIC and pensions)
• Subcontracted R&D and externally provided workers (subject to restrictions)
• Software, cloud computing and data costs
• Consumables and materials used in the process

The treatment of subcontractors and overseas costs is more restrictive under the current rules and requires careful consideration.

The current R&D regime

For most companies, claims now fall under the merged R&D scheme:

• 20% taxable credit
• Typical net benefit of 15%–16% of qualifying spend
• Delivered through Corporation Tax or, in some cases, as a payable credit

Loss-making SMEs with high levels of R&D spend may qualify for enhanced support, subject to specific conditions.

Compliance and HMRC requirements

HMRC has significantly increased its compliance activity in this area.

Claims must now be supported by:

• A clear technical narrative explaining the R&D undertaken
• A robust costing methodology linking expenditure to activities
• An Additional Information Form (AIF) submitted alongside the claim

In some cases, companies must also notify HMRC in advance of making a claim.

Claims that are poorly evidenced or overly generic are increasingly challenged.

How we support you

Our approach is structured and pragmatic. We work alongside your team to:

• Identify qualifying projects and activities
• Quantify eligible expenditure
• Prepare clear and defensible technical documentation
• Submit claims in line with current HMRC requirements
• Support you in the event of an enquiry

We focus on getting the claim right first time—balancing value with compliance.

Related services

R&D tax relief often forms part of a wider tax and advisory strategy. You may also find the following relevant:

• Corporation Tax compliance and planning
• Capital allowances
• Business advisory and growth planning
• Audit and accounts preparation

Timescales

Claims are submitted through the Company Tax Return and must generally be made within two years of the end of the accounting period.

Given the additional reporting requirements, early identification and preparation are recommended.

Speak to us

If your business is investing in innovation, we can help you assess eligibility and prepare a robust claim.