Unlocking Tax Benefits for Innovation

You may be eligible for valuable R&D tax relief. 

If your company is investing in innovation, you may qualify for valuable R&D tax relief. The UK’s Research & Development (R&D) tax credit scheme is designed to support companies developing new or improved products, processes, or software. 

Profit making companies can save tax at between 19% - 25%, and loss-making companies can claim a cash credit worth up to 27% of their qualifying R&D spend. 

This factsheet outlines the key things you need to know to maximise the value for your company. 

What qualifies as R&D? 

To qualify for R&D tax relief, your company must be: 

Seeking an advance in science or technology – your work should contribute to a new or improved product, process, or service, not just for your company, but within your industry. 

Overcoming scientific or technological uncertainty – you must be solving problems where the solution isn’t readily available or known by a competent professional in the field. 

Going beyond routine development – simply upgrading software or refining existing processes without a scientific or technological challenge may not qualify. 

Examples of potentially qualifying R&D work: 

Developing new software, algorithms, or data processing techniques. Creating new materials or engineering solutions. 

Advancing AI, automation, or machine learning applications. 

Improving manufacturing processes to make them more efficient. Experimenting with new drug formulations or medical devices. 

Unlocking Tax Benefits for Innovation

What costs can be claimed? 

The scheme covers a wide range of R&D-related expenses, including: 

Staff costs – salaries, employers NICs, and employers pensions directly involved in R&D. Expenses reimbursed to employees e.g. travel, may also qualify as R&D staff costs in certain circumstances. 

Subcontractor & freelancer costs – a portion of R&D-related subcontractor, and externally provided worker costs (in most circumstances, for accounting periods starting on/after April 2024, these need to be UK based subcontractors/workers, except where replicating the conditions in the UK is wholly unreasonable). 

Materials and consumables – items used up in development, such as materials for prototypes, water, fuel, and power. 

Software – where it is used in R&D activities. 

Data licenses and cloud computing – including data storage, hardware facilities, operating systems and software platforms. 

Clinical trial volunteers – subjects of clinical trials, for example new drugs or medical techniques.

Unlocking Tax Benefits for Innovation

How to prepare for an R&D claim. 

HMRC expects companies to provide clear evidence of their R&D activities. Following Guidelines for Compliance (GfC) best practices can help strengthen your claim: 

Keep detailed project records – document the challenges you faced, experiments conducted, and technological advancements achieved. 

Track costs effectively – maintain records of staff time spent on R&D and allocate costs appropriately. 

Gather supporting evidence – meeting notes, test results, and prototypes can help demonstrate your innovation. 

The Onside team can provide guidance – book a call with us so we can help support you on your claim.

Key risks and common pitfalls. 

While R&D tax relief is generous, HMRC has increased scrutiny over claims. Be mindful of: 

Overstating routine work – ensure claims focus on genuine technological or scientific advancements. 

Insufficient documentation – poor record-keeping can lead to reduced or denied claims. 

Subcontractor/external worker complexities – some outsourced work qualifies at a reduced rate, and restrictions on non UK R&D work from April 2024 may mean less qualifying expenditure for the claim. 

Unlocking Tax Benefits for Innovation

Work with Onside 

Navigating R&D tax relief is complex, and the right advisor makes all the difference. At Onside we provide expert, end-to-end support to ensure a robust, compliant, and optimised claim. Here’s what sets us apart: 

Seamless accounting, tax & R&D support 

Managing R&D claims across multiple advisors can lead to delays, inefficiencies, and missed opportunities. At Onside we integrate accounting, finance, tax advisory, and R&D expertise under one roof - fully analysing expenditure, applying strategic tax planning, and delivering a seamless process. You are involved only when needed, with minimal disruption to your business. 

Specialist tax expertise 

Our CTA-qualified tax specialists and ACCA/CA-qualified accountants oversee your claim, ensuring deep technical knowledge and compliance. Every advisor working on your R&D claim is ATT-qualified or part-qualified in tax. With over 15 years of combined R&D experience, our leadership team, Martin Brennan ACCA - CEO, and Ryan Snape CTA - Managing Director, Onside Tax ensures your claim is handled by experts. 

Comprehensive analysis & high-quality reporting 

A strong R&D claim goes beyond just meeting requirements -it should be thoroughly analysed, well-structured, and backed by clear, technical reasoning. Our team meticulously prepares each claim, providing detailed justifications for qualifying activities and costs. We take pride in producing high-quality, clearly articulated reports that reflect your innovation, making the process smooth and straightforward.

Get in touch today to see how we can help your startup turn innovation into valuable tax relief!