Yes, a UK company can claim R&D tax relief if it is chargeable to Corporation Tax and its project seeks an advance in science or technology by resolving scientific or technological uncertainty. The key point is that HMRC looks at whether the advance is for the overall field, not just for your business.
If your company is developing a new product, improving a process, building complex software, solving engineering problems, or testing whether something is technically possible, you may be eligible. A failed project can still qualify if genuine R&D work took place.
Who can claim R&D tax relief?
In most cases, the business must meet all of the following conditions:
- It is a company within the UK Corporation Tax system.
- It carried out work that aimed to achieve an advance in science or technology.
- The project involved scientific or technological uncertainty.
- The company incurred qualifying R&D expenditure.
Sole traders and ordinary partnerships cannot usually claim R&D tax relief directly in the same way as a limited company. For many businesses, the first eligibility check is simple: if there is no Corporation Tax-paying company and no qualifying technical advance, there is unlikely to be a valid claim.
What counts as a qualifying R&D project?
HMRC’s test is stricter than many businesses expect. A project can qualify when it tries to create an appreciable advance in science or technology, not just a commercial improvement. This means routine product upgrades, design refreshes, standard integrations, and work that a competent professional could easily solve will not normally qualify.
A qualifying project may involve:
- Developing a new process, product, device, or service.
- Making a non-trivial improvement to an existing one.
- Using science or technology to reproduce an existing outcome in a new or improved way.
- Working through uncertainty where the answer was not readily available to a competent professional.
From April 2023, mathematical advances can also count as science for R&D tax purposes. That matters for some data, software, modelling, and algorithm-heavy projects.
Examples of work that may qualify
Businesses often miss genuine claims because they only think of laboratory research. In practice, qualifying R&D can appear in many sectors:
- Software companies building new architectures, automation, AI workflows, or performance-critical systems.
- Manufacturers improving materials, tolerances, testing methods, or production efficiency.
- Engineering businesses solving technical reliability, integration, or scale issues.
- Science-led businesses carrying out experimentation, prototyping, or technical validation.
The commercial goal does not matter as much as the technical challenge. A project can be commercially unsuccessful and still qualify if the technical work itself meets HMRC’s standard.
What costs can usually be included?
Once eligibility has been established, the next step is identifying qualifying expenditure. Depending on the accounting period and scheme, businesses may be able to include costs such as:
- Staffing costs for employees directly involved in the R&D work.
- Externally provided workers.
- Subcontracted R&D costs, subject to the rules for the relevant scheme and period.
- Software used directly for the R&D activity.
- Consumable items used up in the project.
- Data and cloud computing costs where the rules allow.
Because the treatment of some costs changed under the newer R&D rules, companies should review claims carefully by accounting period rather than assuming old treatment still applies.
What usually does not qualify?
Common non-qualifying areas include:
- Routine bug fixes or maintenance work.
- Cosmetic or branding changes.
- Commercial uncertainty rather than technical uncertainty.
- Simple adoption of existing software, tools, or methods.
- Work in the arts, humanities, or social sciences.
This is one reason weak claims often fail. Many businesses have innovation, but not all innovation is R&D for tax purposes.
What changed from 1 April 2024?
The UK R&D relief rules changed for accounting periods beginning on or after 1 April 2024. For many companies, the old SME and RDEC framework has effectively shifted into a new structure, including a merged scheme and special support for some R&D-intensive SMEs.
That means the answer to “can you claim R&D relief?” may depend not only on the project, but also on:
- Your accounting period.
- Whether the company is loss-making or profit-making.
- How R&D-intensive the business is.
- Which categories of expenditure are being included.
If you are reviewing an older claim period and a current one, you should assess them separately rather than using a one-size-fits-all approach.
What records should you keep?
Good claims are built on evidence. Keep a clear technical and financial trail showing:
- What technical advance the project aimed to achieve.
- What uncertainty existed at the start.
- What work was done to resolve it.
- What failed, what succeeded, and why.
- Which staff, systems, and costs were directly involved.
Strong documentation improves both claim quality and audit resilience. It also helps prevent overclaiming, which is especially important as HMRC scrutiny of R&D claims has increased.
Can you claim if the project failed?
Yes. HMRC does not require the project to succeed commercially or technically. What matters is whether the company attempted to resolve genuine scientific or technological uncertainty through qualifying R&D work.
This is an important point for startups and scaling companies. A failed prototype, abandoned system, or technical dead-end may still support a valid claim if the underlying work meets the rules.
FAQs: can you claim R&D relief?
Can a small company claim R&D tax relief?
Yes, if it is a company within the Corporation Tax regime and the project meets HMRC’s R&D conditions. The exact relief route depends on the accounting period and whether the company falls within the newer scheme rules.
Can you claim for software development?
Yes, software projects can qualify where they involve genuine technological uncertainty and seek an advance in the field. Routine builds, standard integrations, and ordinary implementation work usually do not qualify.
Can you claim if the work was outsourced?
Possibly. Some subcontracted and externally provided worker costs can qualify, but the treatment depends on the scheme and timing of the claim, so the detail matters.
Can you claim R&D relief every year?
Yes, provided the company continues to carry out qualifying R&D activity and incurs qualifying expenditure in each relevant accounting period.
Next steps
If you are unsure whether your project qualifies, start with HMRC’s official guidance on checking whether you can claim R&D tax relief. If you are comparing this relief with other business tax reliefs, you may also find our guide on Business Asset Disposal Relief useful.
If you want help reviewing eligibility, qualifying costs, or claim support, speak to CIGMA Accounting for practical guidance before submitting a claim.
