Funding · R&D tax relief
The funding almost nobody claims, because nobody explains it.
If your business paid someone to solve a genuinely hard technical problem this year, HMRC may owe you roughly 16% of what it cost. If you paid someone to build a website, it won't, and anyone telling you otherwise is going to get you audited.
Key findings
- The merged R&D scheme pays a 20% above-the-line credit on qualifying expenditure, worth around 16.2% net to a profitable SME, or the same as a cash refund if you're loss-making.
- Loss-making and R&D-intensive? If qualifying R&D is 30% or more of your total spend, the enhanced scheme pays 27%.
- Routine work does not qualify. Standard websites, routine bug fixing, and plugging in documented third-party APIs are all explicitly out.
- Genuinely hard systems work often does. Custom data architecture, complex database scaling, non-standard legacy integration, pipelines that normalise incompatible schemas.
- Subcontractors count at 65% of invoice value, if they're unconnected to you.
- Documentation must be contemporaneous. Written as you go, not reconstructed for the claim.
What actually qualifies?
The test is not "was this difficult for us". It's whether the work attempted to resolve a technological uncertainty that a competent professional in the field could not have readily deduced.
That's a real bar, and it excludes most of what software companies bill for.
Almost certainly does not qualify
- Building a website, however nice, using established frameworks.
- Routine bug fixing and maintenance.
- Connecting two systems using their documented, supported APIs in the standard way.
- Configuring off-the-shelf software.
- Anything where the answer was known and you just had to do the work.
Can qualify
- Designing novel machine learning models or custom algorithms.
- Solving complex database scaling or data architecture performance problems where the solution wasn't obvious.
- Building retrieval pipelines that have to normalise genuinely incompatible data schemas from different systems.
- Integrating legacy enterprise systems where no supported path exists and the approach had to be invented.
Notice the pattern. The line falls almost exactly where "we knew how to do this" ends and "we had to work out whether this was even possible" begins.
What's it worth?
| Your situation | Scheme | Benefit |
|---|---|---|
| Profitable SME | Merged scheme | ~16.2% of qualifying spend, as reduced corporation tax |
| Loss-making | Merged scheme | ~16.2%, surrendered for a cash payment |
| Loss-making, R&D ≥ 30% of total spend | ERIS | 27% |
On a £20,000 project where the work genuinely qualifies, that's roughly £3,240 back. Not transformative on its own, but it's the difference between a project you approve and one you defer, and it's money you've already spent.
What can you include?
- Direct salaries of the people doing the qualifying work.
- Unconnected subcontractors, at 65% of invoice value. If you hire us to do qualifying work, 65% of what you pay us can go into the claim.
- Cloud computing and data licensing costs directly consumed by the R&D.
The thing that gets claims rejected
Documentation written afterwards.
HMRC has become markedly more aggressive on R&D claims, and a narrative reverse-engineered six months later, with no research notes, no commit history and no record of what was tried and failed, is exactly what an enquiry looks for.
The technical uncertainty has to be visible in the record as it happened. What you didn't know. What you tried. What didn't work. Why the eventual approach wasn't obvious at the start.
How we work with this
If a project has a genuine R&D component, we document it as we go, the uncertainty, the approaches tried, the dead ends, the commits. That record is worth more to your accountant than anything either of us could write from memory.
We do not file R&D claims and we are not qualified to. Use a specialist, and use one who will tell you when you don't have a claim, there are plenty who won't, and it's you who deals with the enquiry, not them.
An honest word about the R&D industry
There is a whole sector of firms that will take a percentage of your claim and are therefore motivated to find one. Some are excellent. Some will happily tell you that your marketing website was a technological uncertainty.
The second kind will get you a payout, and then an enquiry, and then a bill. HMRC's position on routine software development is not ambiguous. If somebody tells you it qualifies, ask them to point at the uncertainty.
Not tax advice. We're a systems consultancy. This is a plain-English summary of published HMRC scheme rules to help you have a better conversation with an actual adviser. Rates and rules change, verify anything you're going to rely on. Last reviewed: July 2026.
Where to start
A free call to work out what's possible
Forty-five minutes, no charge, no deck. Tell us what you are trying to achieve and where technology feels like it is holding you back. We will tell you honestly what is possible, what it would take, and roughly what it is worth. If there is nothing worth building, we will say so.
The scoping call is a short version of Analyse. If you decide to go ahead, we harden it up into the full thing, a detailed project summary rather than a first impression. If you don't, you still leave knowing what's possible and roughly what it's worth.