How to Apply for R&D Tax Credits: Step by Step

How to apply for R&D tax credits

To apply for R&D tax credits, a company makes the claim on its Company Tax Return, and there may be other steps it must complete before that claim is made. Those steps may include a claim notification form sent to HMRC in advance and additional information given before the claim goes on the return.

This guide sets out each stage in the order it happens, so a company looking at R&D tax credits can identify anything it may have missed. The steps on the return differ by scheme, and the scheme used depends on when the accounting period began.

Who can claim the R&D tax credit?

Only companies chargeable to UK Corporation Tax can qualify for R&D tax relief. ^[3] The project must seek an advance in a field of science or technology by resolving scientific or technological uncertainty. A company cannot claim if the advance sought is in the arts, humanities or social sciences, including economics.

For accounting periods beginning on or after 1 April 2024, the merged scheme and enhanced R&D intensive support (ERIS) replace the old RDEC and SME schemes. ^[4] The merged scheme can be claimed by companies that are trading, are chargeable to Corporation Tax and have a project that meets the definition of R&D.

A company may also look at ERIS, and whether it qualifies is covered in how R&D tax credits are calculated. The rate and how the merged credit is paid out are explained in the RDEC scheme explained.

What is an R&D grant, and does it change the claim?

An R&D grant is funding given towards the costs of a research or development project, and it is separate from the tax relief a company claims on its Company Tax Return. A grant can still matter to the claim, because it can affect which scheme applied to older periods.

For an accounting period that began before 1 April 2024, an SME claiming for costs that have been subsidised in some other way, such as a grant, should use the RDEC scheme. ^[5] The same applies to an SME that has received a notified State Aid for the project or is claiming for work subcontracted to it, and a company that does not meet the RDEC conditions may be able to claim using the SME tax relief scheme.

For periods beginning on or after 1 April 2024, those old schemes were replaced by the merged scheme and ERIS.

Telling HMRC in advance with a claim notification form

A company claiming for the first time for an accounting period beginning on or after 1 April 2023 must submit a claim notification form within the claim notification period. ^[2]

A company that has claimed within 3 years of the last date of its claim notification period does not need to send the form, unless HMRC rejected its claim by removing it from the Company Tax Return, or it claimed for an accounting period beginning before 1 April 2023 by amending its return and the amendment was received on or after 1 April 2023.

A company whose last claim was more than 3 years before that last date, or that falls within one of those exceptions, can either submit the form by that date or send the claim on its Company Tax Return, or as an amendment, so that it is received by that date.

The form is completed and submitted by a representative of the company or an agent acting on its behalf.

Notification dates and what the form asks for

The claim notification period starts on the first day of the period of account and ends 6 months after the end of the period of account. If a required form is not submitted within this period, the R&D tax relief claim will be invalid. For a period of account covering 1 January 2024 to 31 December 2024, the last date of the claim notification period is 30 June 2025.

The form asks for the company's Unique Taxpayer Reference and the accounting period start and end date, both of which must match the Company Tax Return. It also asks for a summary of the high-level planned activities; evidence is not needed on the notification form, but additional information will be asked for before the relief is claimed on the return. The form cannot be accessed once submitted, so a copy should be saved first.

Making the claim on the Company Tax Return

For a period of account of 18 months or less, the claim deadline is 24 months from its last day, and for a period of account of more than 18 months it is 42 months from its first day. ^[1] If the claim covers a period of account of more than 12 months, a separate claim is submitted for each accounting period.

Accounting periods beginning before 1 April 2024 use RDEC or SME relief, while those beginning on or after that date use the merged scheme or ERIS. Under each scheme, an X in box 656 tells HMRC the claim notification form has been submitted and an X in box 657 tells HMRC the additional information form has been submitted.

For a merged scheme claim, the expenditure credit is shown as taxable income in the profit and loss account or added to profit in the tax computations, bank details are included so HMRC can make the payment, and supplementary form CT600L is completed. For an ERIS claim, the additional deduction is included in calculating the adjusted trading profit or loss, losses given up for a payable tax credit are not included in the loss carry forward figure, and form CT600L is completed if a payable tax credit is claimed.