Preparing an R&D tax credit claim can feel a bit overwhelming at first. You know there’s real value on the table, but figuring out where to begin isn’t always obvious.
The process is more straightforward than it looks, but the steps matter and the order matters. This guide walks through each one, from choosing the right scheme to filing your CT600, so you know exactly what's involved before you start.
Step 1: Do you need to submit a Claim Notification Form?
Before anything else, you need to check whether you're required to notify HMRC that you intend to claim. The Advance Notification Form (also known as the ANF or Claim Notification Form) applies to first-time claimants and to companies that haven't made an R&D claim in the last three years, for accounting periods beginning on or after 1 April 2023.
The deadline is six months after the end of your period of account, which is significantly earlier than the two-year deadline for the claim itself. If you miss this deadline, your claim will be rejected.
The form itself is straightforward; it requires basic company details, contact information, and a high-level summary of your planned R&D activity, with no costing detail required at this stage.
For a full breakdown of who needs to submit one and when, see our guide: Claim Notification Form and whether your R&D claim needs one.
Step 2: Which R&D relief scheme applies to your company?
Before you touch a spreadsheet or write a single line of technical narrative, you need to know which scheme applies. This matters because the scheme determines your relief rate, how your costs are calculated, and in some cases, what you can claim.
For accounting periods beginning on or after 1 April 2024, the old SME R&D Relief scheme and the standalone RDEC scheme were replaced by two new schemes: the Merged Scheme and Enhanced R&D Intensive Support (ERIS). If your accounting period straddles 1 April 2024, transitional rules apply and you may need to apportion the claim across both the old and new frameworks.
The Merged Scheme
The Merged Scheme is the default regime for most UK companies (both SMEs and large businesses) for accounting periods beginning on or after 1 April 2024. Under the scheme, companies receive a taxable above-the-line credit equal to 20% of qualifying R&D expenditure. The credit is offset against tax liabilities before any remaining balance is repaid to the company.
Since the credit is recognised above the line, it appears in operating profit, making R&D investment more visible in financial reporting. Large companies will always claim under the Merged Scheme, if eligible; SMEs will too, unless they qualify for ERIS.
Enhanced R&D Intensive Support (ERIS)
The Enhanced R&D Intensive Support (ERIS) is designed for loss-making SMEs that spend at least 30% of their total expenditure on qualifying R&D. It provides enhanced relief and a payable tax credit from HMRC, making it particularly valuable for companies investing heavily in innovation before reaching profitability.
Eligibility depends on being an SME, loss-making status and R&D intensity, so calculate your position carefully before filing under ERIS rather than the Merged Scheme.
Step 3: Should you apply for Advance Assurance?
If this is your company's first time claiming, HMRC offers an Advance Assurance scheme in two forms. Neither is mandatory, but for first-time claimants with no prior HMRC relationship, it can be worth the time.
Full Claim Advance Assurance covers smaller, first-time claimants. You can apply if your company:
- has a turnover below £2 million and fewer than 50 employees
- is planning to carry out R&D, or has already carried out R&D but has not yet made a claim
- is part of a group where none of the linked companies have previously claimed R&D tax relief
If HMRC agrees, the assurance covers your first three accounting periods. You can apply yourself, or your agent can apply on your behalf.
Targeted Advance Assurance focuses on up to two specific areas of your R&D work rather than the whole claim. It is available to SMEs carrying out, or planning to carry out, R&D in the relevant accounting period, provided they haven't yet claimed for that period and haven't already received assurance on the same areas.
Targeted Advance Assurance is not available to:
- large companies
- companies seeking assurance on three or more areas of their claim
- companies that have already applied for Full Claim Advance Assurance for the same period
- companies (or any connected person as defined in the Corporation Tax Act 2009) that have entered into a disclosable Tax Avoidance Scheme (DOTAS), been categorised as a Corporate Serious Defaulter, or have an open enquiry into a Corporation Tax return
Most companies simply file their claim without seeking advance assurance. It's worth considering if this is your first claim and you want a degree of certainty before committing.
Step 4: Does your work qualify as R&D?
This is where many claims go wrong, and it's the most important part to get right. R&D for tax purposes has a specific legal meaning. HMRC defines qualifying R&D as work that seeks to achieve an advance in science or technology by resolving scientific or technological uncertainty.
What counts as a scientific or technological advance?
A scientific or technological advance is an improvement in the overall knowledge or capability of a field, not just your company's internal progress. It may involve applying knowledge from another discipline in a non-obvious way, or creating new or improved processes, products, or methods that represent a genuine step forward.
However, simply using existing science or technology is not enough; routine application does not constitute an advance. To qualify, the work must either extend the field’s overall knowledge, deliver a meaningful improvement to existing solutions, or replicate an existing outcome in a fundamentally new or improved way.
What counts as scientific or technological uncertainty?
Uncertainty exists when it isn't possible to determine whether something is scientifically or technologically feasible, or how to achieve it, even by applying the knowledge of a competent professional in the field. If a reasonably experienced engineer, scientist, or developer in your sector could have looked at the problem and known the answer, it's routine work, not uncertainty.
Who should provide the technical narrative?
The technical narrative in your claim should come from the people who actually did the work (your engineers, scientists, developers, researchers). These are the competent professionals who understand the iterative development cycle: what was tried, what failed, what changed, and what ultimately worked or didn't.
Your R&D claim should include a clear timeline: of when the R&D began (the point at which the uncertainty was identified and work commenced to resolve it) and when it ended (the point at which the uncertainty was resolved, or the project was abandoned). This timeline anchors the qualifying period and helps map costs accurately.
Step 5: What costs qualify?
Once you know what qualifies as R&D activity, you need to map your expenditure against it and then apportion those costs for only the R&D portion.
The largest portion of most claims is staff costs, which cover salaries, employer's National Insurance contributions, and pension contributions for employees directly and actively engaged in qualifying R&D. Where a staff member works partly on R&D and partly on other activities, you can apportion their time. Contemporaneous timesheets are the most defensible approach; a clearly documented methodology also works.
You can claim 65% of payments to unconnected subcontractors and externally provided workers (EPWs) carrying out qualifying R&D on your behalf. For connected parties, the claim is limited to the lower of the payment made or the subcontractor's own qualifying cost. EPWs based outside the UK no longer qualify under the Merged Scheme.
Consumables means materials used or transformed in the R&D process. Where a material ends up incorporated into a product that is sold, it won't qualify. Since April 2023, the definition has been broadened to include cloud computing costs, data licences, and utilities (light, heat, water). Software licence costs are also claimable where the software is used directly in qualifying R&D. Where software is used partly for R&D and partly for other purposes, a reasonable apportionment applies.
The most practical way to identify qualifying costs is to start with your payroll: who worked on R&D, and for what proportion of their time? Then work through your purchase ledger and supplier invoices: what was bought to support the R&D? Match each cost to a qualifying project and document the rationale. The trail from your nominal ledger to your R&D schedule should be clear and reproducible.
For our full guide on qualifying costs, see this article: What Costs Can Be Claimed in an R&D Tax Claim?
Step 6: Submit the Additional Information Form (AIF)
Every company making an R&D claim must submit an Additional Information Form (AIF) to HMRC before or at the same time as filing their CT600. This is mandatory. If you file the CT600 without a corresponding AIF, HMRC will remove the R&D claim entirely.
The AIF is submitted online through HMRC's Additional Information Form portal, separately from your tax software. It requires:
- Contact details: your main R&D contact within the business, and your agent's details if applicable
- Technical narrative: a project-level description of the R&D: what you were trying to achieve, what the uncertainty was, and how you tried to resolve it. HMRC expects genuine, specific detail, not generic descriptions that could apply to any company
- Cost breakdown: qualifying expenditure by category, linked to the projects described
Step 7: File your CT600
With the AIF submitted, you, your accountant or your R&D tax adviser can file your Corporation Tax return (CT600) with the R&D figures included. Under the Merged Scheme, the credit appears as a separate line item, offset against the tax liability, with any excess repayable.
Ensure your CT600, tax computation, and iXBRL-tagged accounts all tell a consistent story. Inconsistencies between documents are one of the most common triggers for a compliance check.
Retain the AIF reference number, a copy of the CT600, the full R&D cost schedule, and all supporting documentation. HMRC expects records to be kept for a minimum of six years.
End-to-end checklist
- Confirm which scheme applies: Merged Scheme or ERIS
- Consider Advance Assurance
- Gather the technical narrative from the people who actually did the R&D
- Document each qualifying project, including the advance, the uncertainty, the work to resolve it, and start and end dates
- Map qualifying costs by category
- Submit the Additional Information Form via HMRC's portal
- File the CT600 with consistent, reconciled R&D figures
- Retain all supporting records
If you qualify, R&D tax relief is one of the most valuable incentives available to UK businesses. Getting the process right from the start means less risk at submission and a stronger claim.
If you'd like help working through your claim, get in touch with the Tax Cloud team and we'll walk you through it.
