R&D Tax Credits: How Much Could Your Limited Company Claim?

A limited company claiming under the merged R&D scheme in 2026/27 receives a 20% expenditure credit on qualifying research and development costs, worth roughly 15p to 16.2p of net benefit for every £1 spent once corporation tax is applied. R&D tax credits SME UK 2026 claims reward companies that solve genuine technical or scientific uncertainty, from software firms building new algorithms to manufacturers developing improved processes. Many profitable companies never claim because they assume research and development tax relief only applies to laboratories and white coats, which is a costly misunderstanding. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, helps limited company owners identify qualifying work, calculate the benefit accurately, and file robust claims that stand up to HMRC scrutiny. This guide explains who qualifies, what counts, how much you could receive, and how the claim process works.

Key Takeaways

• The merged R&D scheme gives a 20% taxable expenditure credit on qualifying costs, producing a net benefit of around 15% to 16.2% for most companies in 2026/27.
• Loss-making R&D-intensive SMEs, where qualifying R&D is at least 30% of total expenditure, can claim Enhanced R&D Intensive Support (ERIS) worth up to around 27p per £1 spent.
• Qualifying costs include staff salaries, subcontractors, externally provided workers, software, cloud computing, data licences and consumable materials.
• Claims must be filed within the company tax return within two years of the end of the relevant accounting period.
• First-time and recent claimants must submit a Claim Notification form to HMRC within six months of the accounting period end, or the claim is invalid.
• An Additional Information Form is mandatory for every R&D claim before the company tax return is filed.

What are R&D tax credits and who qualifies?

R&D tax credits are a UK corporation tax relief that rewards limited companies for spending money to resolve scientific or technological uncertainty. A company qualifies when it seeks an advance in a field of science or technology that a competent professional could not readily work out, and where the outcome was genuinely uncertain at the outset. This is far broader than most owners expect. Developing new software functionality, engineering a more efficient production line, creating a new material, or significantly improving an existing product can all qualify as research development tax relief.

The work does not need to succeed. A failed project that attempted to overcome a real technical hurdle still qualifies, because the uncertainty existed regardless of the result. What does not qualify is routine work, cosmetic changes, or simply applying existing technology in a standard way. The test is technical difficulty, not novelty to your market. If your team faced a problem with no obvious solution and had to experiment to find one, there is a strong chance the project counts.

How much could your company claim in 2026/27?

Under the merged R&D scheme that now applies to most companies, the credit is 20% of qualifying expenditure, delivered as a taxable above-the-line credit. Because the credit itself is subject to corporation tax, the net cash benefit is around 15% for companies paying the 25% main rate and up to 16.2% for those on the 19% small profits rate.

Consider a limited company that spends £120,000 on qualifying R&D during its accounting period. The 20% expenditure credit is £24,000. After corporation tax at 25% on that credit, the company retains a net benefit of £18,000, equal to 15% of the qualifying spend. That £18,000 either reduces the corporation tax bill or, for a loss-making company, can be paid out as cash after the set steps.

Loss-making companies that are R&D-intensive receive more. Where qualifying R&D expenditure is at least 30% of total expenditure, the company can claim Enhanced R&D Intensive Support (ERIS) instead. ERIS gives an 86% enhanced deduction plus a 14.5% payable credit on the surrenderable loss, worth up to around 27p for every £1 of qualifying spend, a meaningful cash injection for early-stage firms.

Which costs qualify for research and development tax relief?

Qualifying costs are the expenses directly attributable to resolving the technical uncertainty in your project. The main categories are staff costs, subcontractors, externally provided workers, and consumables. Getting this right is where most of the claim value is won or lost.

Staff costs are usually the largest element and include gross salaries, employer National Insurance, and employer pension contributions for employees engaged in R&D, apportioned to the time they actually spent on qualifying work. You can also claim a proportion of subcontractor and externally provided worker costs, software licences, cloud computing and data costs used in the R&D, and consumable items such as materials, power, water and fuel consumed or transformed during the project. Since April 2024, subcontractor and externally provided worker costs generally must relate to UK-based activity, with limited exceptions, so overseas work needs careful review under the RDEC scheme HMRC rules. Ordinary overheads such as rent, telephone and general administration do not qualify.

How do you make an R&D tax credit claim?

An R&D claim is made through the company tax return (form CT600) and must reach HMRC within two years of the end of the accounting period to which it relates. Two additional steps are now compulsory and catch out many first-time claimants.

First, an Additional Information Form must be submitted to HMRC before, or at the same time as, the company tax return for every single claim. It sets out the projects, the technical narrative, and a breakdown of qualifying costs. A claim filed without it will be rejected. Second, companies that have not claimed before, or have not claimed in the previous three years, must file a Claim Notification form within six months of the end of the accounting period. Miss that window and the claim is lost entirely, even if the work clearly qualified. Newer SMEs can also apply for HMRC Advance Assurance, which confirms in principle that their R&D qualifies for their first three accounting periods, giving welcome certainty before a claim is submitted.

For a full overview of the reliefs, thresholds and worked scenarios across company types, see our guide to R&D tax credits for small businesses.

Frequently Asked Questions

How much are R&D tax credits worth in 2026/27?

Under the merged R&D scheme, the credit is 20% of qualifying expenditure and is taxable, giving a net benefit of around 15% for companies paying 25% corporation tax and up to 16.2% for those on the 19% small profits rate. Loss-making R&D-intensive SMEs can receive up to around 27p per £1 through Enhanced R&D Intensive Support.

Does my software company qualify for R&D tax relief?

A software company qualifies for R&D tax relief when it works to resolve genuine technological uncertainty, such as developing a new algorithm, integrating systems in a way with no established solution, or significantly improving performance beyond what existing tools allow. Routine coding, standard configuration, and cosmetic changes do not qualify. The test is whether a competent developer could readily have known the answer.

Can a loss-making company claim R&D tax credits?

Yes, a loss-making company can claim R&D tax credits and receive a cash payment rather than a tax reduction. Under the merged scheme the expenditure credit can be paid out after set steps, and R&D-intensive SMEs, where qualifying R&D is at least 30% of total spend, can claim Enhanced R&D Intensive Support worth up to around 27p per £1 of qualifying expenditure.

What is the deadline to make an R&D claim?

An R&D claim must be included in the company tax return and filed within two years of the end of the relevant accounting period. In addition, first-time and recent claimants must submit a Claim Notification form within six months of the accounting period end, and an Additional Information Form is required for every claim before the tax return is submitted.

What costs can I include in an R&D claim?

You can include staff costs (salaries, employer National Insurance and pension contributions) for time spent on R&D, a proportion of subcontractor and externally provided worker costs, software, cloud computing and data costs, and consumables such as materials and power used in the project. General overheads like rent and standard administration are excluded.

How Blue Tick Can Help

Blue Tick Accountants helps limited company owners identify qualifying projects, capture the full range of eligible costs, and prepare technically robust R&D claims with the Additional Information Form and Claim Notification handled correctly. With HMRC scrutiny of R&D claims at an all-time high, a well-documented claim protects your benefit and your peace of mind. Head to our website and book a meeting now.

Conclusion

R&D tax credits reward companies that solve real technical problems, and the value can be substantial: around 15% to 16.2% of qualifying spend under the merged scheme, and up to 27% for R&D-intensive loss makers. The most common mistake is assuming your work does not count. If your business has invested time and money overcoming technical uncertainty, review your eligibility, document the work carefully, and file before the deadlines pass.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps limited company owners, landlords and the self-employed across the UK. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: The Merged R&D Relief Scheme: What Changed in April 2024.

Related reading: Qualifying Costs for R&D Tax Relief: Staff, Consumables and Subcontractors.

Related reading: HMRC Enquiries into R&D Claims: What Triggers Them and How to Respond.