If your business invests in new products, processes or technology, R&D tax relief can still provide a valuable cash boost. Yet the number of R&D claims has fallen sharply, even as the total support remains high. HMRC’s latest statistics show around 46,950 claims in 2023/24, down 26% on the previous year, but still delivering £7.6 billion of relief.
The message is clear: the money is still there, but you need to be more organised and more precise to secure it. Below, we set out how we approach maximising an R&D claim under the merged scheme and ERIS rules that apply to 2025/26.
Why maximising your R&D claim matters
A well-prepared claim can:
- Improve cash flow through tax repayments or reduced Corporation Tax
- Support future research and development activities that you might otherwise delay
- Strengthen your valuation if you are raising investment or selling
At the same time, HMRC has tightened compliance. Every claim now needs a detailed additional information form, and first-time claimants (or those returning after a break) often have to pre-notify HMRC. Advisers also report that up to one in five claims face some form of enquiry, as HMRC seeks to tackle error and fraud.
So maximising your claim is not just about squeezing out every pound; it is about doing so in a way that stands up to scrutiny.
Understand the 2025/26 rules
For accounting periods beginning on or after 1 April 2024, which includes typical 2025/26 year ends, the main options are:
- The merged Research and Development Expenditure Credit scheme
- Single 20% expenditure credit on qualifying R&D costs
- The credit is taxable, so most companies see a net benefit of around 15 to 16% of eligible spend, depending on their Corporation Tax rate.
- Available to companies of any size that are within Corporation Tax and meet the definition of research and development.
- Enhanced R&D Intensive Support (ERIS)
- For loss-making SMEs that spend at least 30% of their total expenditure on qualifying research and development in the period
- Gives a 186% total deduction (100% normal deduction plus 86% uplift) and a payable tax credit of up to 14.5% of surrenderable losses, which is not taxable
- An effective cash benefit can be around 27% of qualifying expenditure for businesses that meet the conditions.
If you qualify for ERIS, you can still choose to use the merged scheme instead, but you cannot claim both on the same expenditure.
Identify the right development projects
We start by mapping your activity against HMRC’s definition of research and development for tax purposes. Under that definition, a project tends to qualify when:
- Your project seeks to achieve an advance in science or technology, not just routine product development
- There is real scientific or technological uncertainty that a competent professional could not easily resolve at the outset
- You follow a process of testing, trialling or experimentation to overcome that uncertainty
Typical qualifying work includes:
- Developing or materially improving software, platforms or digital tools
- Designing new manufacturing processes, automation or control systems
- Formulating new materials, components or product variants where technical performance is uncertain
- Using data science, machine learning or advanced analytics to solve genuine technological problems
We also check where the work is done. Under the reformed rules, overseas research and development costs are usually excluded, unless they fall within narrow exceptions such as certain regulatory or safety requirements.
Capture all qualifying expenditure
Once we are confident about which projects qualify, the next step is to capture every eligible pound of spend, without drifting into areas HMRC would see as routine.
Key categories we review are:
- Staff costs – salary, employer NIC and pension for people directly involved in research and development activities, plus an appropriate portion of supervisory and managerial time
- Externally provided workers – where you pay an agency or related company for individuals under your direction
- Subcontracted research and development – subject to specific rules under the merged scheme about who bears the risk and makes the key decisions
- Consumables – materials, prototypes and certain utilities used up in research and development
- Software, data and cloud computing – many of these costs are now clearly within scope when used directly for research and development activities
We work with your finance and technical teams to create allocations that are reasonable, consistent and evidence-based, rather than rough guesses that might be hard to defend.
Get the paperwork right
Two process points now make or break a claim:
- Claim notification (where required)
- If you have not made a valid research and development claim in the last three years, or this is your first claim, you may need to submit a claim notification form.
- This must reach HMRC within six months of the end of your period of account, not the usual 12-month filing deadline for the Corporation Tax return.
- Additional information form (AIF)
- Every claim must be supported by an AIF, submitted through HMRC’s portal before or at the same time as the CT600 that includes the claim.
- The AIF needs project descriptions, cost breakdowns and contact details for a named competent professional.
Claims are then made in the Corporation Tax return in the usual way, but without the AIF and where needed the notification, HMRC will simply refuse to process them.
Avoid common mistakes
When we review research and development claims, we often see the same problems:
- Over-claiming routine work, such as standard software configuration or cosmetic product tweaks
- Missing the intensity calculation for ERIS, or not including connected companies when working out the 30% threshold
- Weak technical narratives – project write-ups that read like marketing copy rather than factual summaries of the technological advance and uncertainties
- Poor link between projects and costs, so HMRC cannot see how the figures tie back to people, tasks and detailed documentation
- Late or missing notifications can lead to loss of relief for an entire period, even if the research and development clearly qualifies
We build checks around each of these areas so your claim is not only as generous as it should be, but also robust if HMRC asks questions.
Build research and development into your year-round process
The most effective way to maximise a claim under the 2025/26 rules is to treat research and development as a live process, not a backwards-looking exercise. In practice, that means:
- Tracking potential research and development projects and staff time throughout the year
- Keeping short, factual notes of trials, failures and design decisions as you go
- Agreeing on a simple internal sign-off process for research and development projects and budgets
- Reviewing your position well before the six-month notification deadline and the 12-month filing deadline
Done well, this approach reduces the work at year-end and gives you far better evidence if HMRC ever opens an enquiry.
How we can help
We help UK businesses assess which research and development projects qualify, model the benefit under the merged scheme or ERIS, gather and structure the underlying data, and prepare the technical and financial analysis needed for a strong tax credit claim. We aim to secure the relief you are entitled to, while keeping your risk with HMRC as low as possible.
At Cottons, we support businesses across the UK with R&D tax relief claims as part of our wider corporate tax and advisory work, helping innovative companies thrive in competitive markets and contribute to economic growth.
