If you run a business in the UK and you’ve worked on improving your products, services, or how you do things, you might be able to claim money back from the government. This is done through something called R&D tax credits.

Many business owners don’t realise they qualify for this. Some think it’s only for big companies or tech firms, but that’s not true. This guide will explain what R&D tax credits are, who can claim, and how to make the process simple.

Let’s break it down step by step.

What Are R&D Tax Credits?

R&D stands for Research and Development. It’s the work a business does to try new ideas, create new products, improve processes, or solve problems in a new way.

The UK government offers tax relief (also known as a rebate or refund) to companies doing this kind of work. This means you can reduce your tax bill or get cash back if your business made a loss.

Who Can Claim?

You can claim R&D tax credits if:

• You’re a UK company
  
• You’ve done projects where you tried to make something better, faster, safer, or more efficient
  
• You spent money on things like staff time, materials, software, or contractors to do the work
  

You don’t need to be a tech company or wear lab coats. Businesses in almost every industry can qualify, including:

• Construction
  
• Manufacturing
  
• Food and drink
  
• Software development
  
• Engineering
  
• Agriculture
  
• Architecture
  
• Design
  

What Counts as R&D?

Many people think of research as something done in labs. But for tax credits, R&D means trying to improve something in a new way.

If you’ve done any of the following, you might be doing R&D without even realising it:

• Creating a new product or improving an old one
  
• Building software that didn’t exist before
  
• Making a process quicker, cheaper, or safer
  
• Solving a problem with no obvious answer
  
• Trying different approaches to get something to work
  
• Testing and trialling new solutions
  

And guess what? It doesn’t have to be successful. Even if it didn’t work, you can still claim. It’s the trying that counts.

What Costs Can You Claim?

You can claim money back on several things you spent during your R&D work:

1. Staff Costs

• Salaries, wages
  
• National Insurance contributions
  
• Pension contributions
  
• Bonuses (if they relate to R&D work)
  

2. Subcontractors and Freelancers

• You can claim part of what you paid others to help with your R&D project
  

3. Materials

• Anything used up during the project (like chemicals, parts, or prototypes)
  

4. Utilities

• Water, power, and heat used during the work
  

5. Software

• Tools or programs that were needed for R&D
  

What Doesn’t Count?

Not everything counts. You can’t claim for:

• Day-to-day running costs (like rent or phone bills)
  
• Sales and marketing
  
• Training staff
  
• Projects that just use existing knowledge or tools
  

How Much Can You Get?

This depends on your business size and whether you’re profitable or not.

For Small or Medium Companies (SMEs):

If your business has:

• Fewer than 500 employees
  
• Less than €100 million turnover
  

Then you may:

• Get up to 33% back on eligible R&D costs
  
• Receive a cash payment if your business made a loss
  
• Or reduce your Corporation Tax bill if you made a profit
  

For Larger Companies:

You may qualify under a different scheme (called RDEC), which offers around 20% back on costs.

How Far Back Can You Claim?

You can go back two accounting years. So if your financial year ends in March 2025, you can claim for R&D done in April 2023.

If you wait too long, you might miss out. So it’s best to start soon.

Step-by-Step: How to Claim R&D Tax Credits

Let’s look at the full process in simple terms.

Step 1: Check If You Qualify

Ask yourself:

• Did we try to improve something in a new way?
  
• Did we spend money doing this?
  
• Did it involve problem-solving or trial and error?
  

If yes, you probably qualify.

Step 2: Identify the R&D Work

Make a list of the projects that could count as R&D.

For each project, write down:

• What you tried to do
  
• What problem you faced
  
• How you tried to solve it
  
• Whether it worked or not
  

Remember, the outcome doesn’t matter – it’s the attempt that counts.

Step 3: Work Out the Costs

Now look at how much money you spent on those projects. Include:

• Staff wages (and time they spent on R&D)
  
• Contractor costs
  
• Materials and utilities used
  
• Software or tools
  

Try to keep records or estimates to support your numbers.

Step 4: Write a Short Report

You’ll need a technical report to explain what your projects were about.

Include:

• What the project was
  
• What was difficult about it
  
• How you approached the problem
  
• What the result was
  

Keep it simple and clear. You don’t need to use big technical words—just explain what happened in plain English.

Step 5: Submit Your Claim

You’ll include your R&D claim in your Corporation Tax return (CT600).

This involves:

• Adjusting the numbers to reflect the R&D costs
  
• Including your report and calculations
  
• Filling out any extra forms HMRC asks for
  

If this sounds tricky, don’t worry—Swanson Reed and other specialists can help do this for you.

Step 6: Wait for the Refund or Tax Relief

HMRC will look at your claim. They may:

• Approve it
  
• Ask questions
  
• Request more information
  

Once approved, you could receive your refund or tax relief within 4 to 8 weeks.

Why Work With a Specialist Like Swanson Reed?

At Swanson Reed, we help businesses claim R&D tax credits. That’s all we do—so we’re very good at it.

Here’s how we help:

• Free consultation: We’ll check if you qualify
  
• Handle all paperwork: You don’t need to fill in any forms
  
• Write your reports: We explain your R&D clearly to HMRC
  
• Maximise your claim: We help you get the most you can
  
• Answer HMRC questions: If they need more details, we handle it
  

We work with start-ups, growing companies, and accountants. You keep your clients—we just take care of the R&D claims.

Common Myths About R&D Tax Credits

Many business owners don’t apply because they believe things that aren’t true. Let’s clear them up:

“My business isn’t technical enough.”

Wrong. You don’t need to be in science or tech. Even food companies, builders, and designers can qualify.

“The project failed, so I can’t claim.”

Incorrect. You can still claim for failed projects. What matters is that you tried something new.

“I don’t have time.”

You don’t need much time. A specialist can do most of the work for you.

“It’s too hard.”

Not when you have someone guiding you. We keep it simple.

“I already claimed once.”

You can claim every year you do R&D work. It’s not a one-time deal.

Tips for a Smooth Claim

1. Start early – Don’t wait until the deadline
   
2. Keep records – Track hours, materials, and project notes
   
3. Talk to a specialist – Get help to avoid mistakes
   
4. Review projects often – Look at what you’ve done each year
   
5. Don’t assume you don’t qualify – Always check
   

Final Thoughts

If you’re a UK business that tries new ideas, solves problems, or improves the way you work—you could be owed money.

R&D tax credits are not just for big companies. They’re for any business that’s trying to do something new. Whether your project was a success or not, you might still be able to claim.

The process doesn’t have to be confusing or stressful. At Swanson Reed, we make it easy.

All you have to do is take the first step. Book a free consultation, and we’ll take care of the rest. You’ve already done the hard work—now let us help you get rewarded for it.
Visit https://www.swansonreed.co.uk/