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R&D tax credits

What are R&D tax credits?

In the UK companies are able to claim tax relief for their R&D activity. These government schemes are designed to boost innovation by supporting businesses who seek to improve or overcome challenges and uncertainties in their products and processes. These schemes are administered by HMRC.

For expenditure incurred on or after 1 April 2023, the new rates announced in the Autumn Statement 2022 now apply.

The single R&D tax relief scheme, which merges the SME and RDEC schemes, is confirmed to go ahead for accounting periods starting on or after 1 April 2024. There is a reduction in the notional tax rate applied for loss-making SMEs in the new merged scheme from 25% to 19%. However, there is an enhanced rate for loss-making R&D intensive SMEs defined as a business whose qualifying expenditure represented 30% or more of their total expenditure.

Not sure which R&D tax credits scheme to use?

Deciding which scheme to use is largely dependent on the size of your business, but there are other factors that need to be taken into account. Use our interactive decision tree to find out which scheme is the best fit for your business*.
It only takes a few seconds.

Question: How many people does your business employ?

Question: What is your annual turnover?

Question: What is the value of your balance sheet assets?

Question: Is your R&D subsidised?

Question: Have you applied or are you receiving State Aid for your R&D projects?

Question: Is your business subcontracted by a larger company?

Question: Are you no longer considered a “going concern”?

We think the RDEC scheme is the best place to start

Talk to us about which R&D tax relief scheme will work for you

Even though your business is probably classified as an SME we have identified some reasons why you might not be eligible for the SME R&D scheme. However, you may well be able to claim through the RDEC scheme instead.

We think the SME R&D tax relief scheme is the best place to start

Please note If your business has external investors this can affect your SME status. You may need to include the figures of connected companies and partner companies when you work out if your business is an SME and decide which scheme is best for you. If you are in doubt then speak to us and we’ll run through the numbers with you.

Why choose Source Advisors?

We match you with an industry, commercial, or technical expert that best suits your business. Irrespective of size and complexity, we will find the right technical expert who can add the most value to your claim.

We work alongside your accountant to complement their skills so there is no conflict. Your relationship with your accountant won’t be adversely affected.

Speak to a member of our team​

Please see our privacy policy for more information.

We will never share your details with any third party.


of claim benefit delivered by Source Advisors for our UK clients


of our UK clients* who made a claim in 2020 continue as a Source Advisors client today


specialists available globally

*The remaining 10% includes clients who no longer carry out R&D, ceased to trade, or have been acquired

How to claim your R&D tax credits

We want to work with you to get the best results for your business. With Source Advisors every step will be easy and transparent.

1. Get in touch

1. Get in touch

The first step is to find out a little bit about your business, to understand how we can help you.

If we don’t think we can help at all, then we’ll let you know.

Work together

2. Agreeing how we work together

We set out what we can do for you, when we will do it and what we will charge. Everything is transparent. We hope the only surprise will be how much you can successfully claim.

Initial qualification

3. Initial qualification

You will be matched with a technical consultant, who will best understand your business and speak your language. We need to review your financial information to assess if a claim will be worthwhile and to give you an estimated claim value.

Getting to know your business

4. Getting to know your business

We will introduce you to your technical team and arrange initial meetings. They will spend some time with you to identify the areas where a claim can be made – we know where to look.

Putting your best claim together

5. Putting your best claim together

Taking the things that we’ve learnt about you, we will work with our tax experts to pull everything together. We know what HMRC is looking for and what makes a successful claim. 

Your report

6. Your report

We may need some follow up information to evidence the claim.

The report is sent to you for approval and this will give you the size of the claim. We are authorised to submit a claim to HMRC on your behalf.

7. Dealing with HMRC

If HMRC come back with further questions then we will of course deal with them for you. Your award will come to you as a cheque or a tax allowance – usually within a month of submitting a claim.

Receiving the benefit

8. Receiving the benefit

We invoice once we’ve had confirmation of the claim paid. You only settle your Source Advisors invoice once you’ve received the grant or tax relief.

Already claiming R&D tax credits?

Contact us to find out how you can make the most of your claim


Below are some frequently asked questions about making R&D tax relief claims. If you have any further questions please contact our team who will be happy to advise you.

In the UK, companies are able to claim tax relief for their qualifying R&D activity. The schemes, for SMEs and larger companies, are both administered by HMRC. Historically SMEs could claim back up to 33% of the amount they’ve spent on qualifying R&D. From the 1 April 2023 this will reduce to a maximum of 18.6% for loss making companies, increasing to 27% if the company is R&D intensive (defined as their qualifying expenditure represents 40% or more of their total expenditure).

Companies who claim under the RDEC scheme historically received over 10% of their R&D spending refunded, for expenditure incurred on or after 1 April 2023 this will increase up to 15%.

The R&D scheme is administered by HMRC, therefore companies claim R&D relief by entering the total qualifying expenditure on the full Company Tax Return form, CT600. Tax relief is given as either a reduction in the tax liability or, if the company is loss making, a refundable tax credit payable as cash on the amount of qualifying R&D expenditure.

No, the company can be in a loss position. These losses can then be utilised (i.e. not carried forward for tax relief in the future) and the company receive an R&D cash refund, without paying any corporation tax.

One of the requirements for an R&D claim is that the qualifying costs are included in the accounts and are allowable for tax purposes.

Therefore, we need to check that the qualifying costs are included in the relevant accounts either in the profit and loss account or Intangible fixed asset additions, and also that they are not disallowed in the tax computation.

For tax purposes, R&D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology.

You can claim against certain costs that are allowable for tax purposes on the project including:

  • Employment costs to the company including salaries, bonuses, some reimbursed costs, employers Class 1 National Insurance contributions, employers pension fund contributions
  • Subcontractor costs (certain restrictions apply if you are claiming under the RDEC scheme)
  • Externally Provided Workers (EPWs)
  • Software (revenue costs)
  • Consumable items including materials and utilities like light and heat
  • Clinical trials volunteers in the pharmaceutical industry

For full accounting periods starting on or after 1 April 2023 the following R&D related costs will also be allowable.

  • Data licenses
  • Cloud computing

Within the SME scheme, a company can claim subcontractor costs (UK or overseas) for direct R&D activities, but for the RDEC scheme the subcontractor rules are more restrictive.

Yes, employees and externally provided workers (EPWs) are the only qualifying costs where indirect R&D activities can be claimed (i.e. subcontractors cannot claim for indirect R&D activities)

For SMEs, outsourced subcontractor costs (in the UK or overseas) that are undertaking qualifying direct R&D activities are allowable costs and can be included in the R&D claim. There is however a statutory deduction of 65% from the costs if the subcontractor is not connected or deemed to be connected to the company.

Generally, if the grant funding is “State Aid” then the company will need to make a claim under the RDEC scheme (even if they would normally qualify as an SME).

R&D tax relief may reduce your company’s tax bill if your company is liable for corporation tax or, if you make a loss, you may be able to surrender this loss and claim a tax credit. The R&D schemes enables companies with no corporation tax liability to benefit through a cash payment or a reduction of tax.

HMRC may open an R&D enquiry, firstly they will request further evidence, this could be Technical or Financial, often both. 

Once the questions from HMRC have been addressed, HMRC may conclude either, that there is no qualifying R&D activity and request the claim is withdrawn, or if they agree that there is some qualifying R&D activity but this is not represented by the costs claimed, they will reduce the R&D claim to fairly reflect the qualifying R&D activities undertaken by the company.

As a Source Advisors customer if you face an HMRC enquiry we will defend it on your behalf at no extra charge. 

See our work in action with our client success stories​

R&D tax credits
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Source Advisors are easy to talk to and you’ll be surprised by how easy, and valuable the exercise will be for your business.

Roly Holt | Managing Director, R&L Holt

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R&D tax credits
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Our experience with Source Advisors has been fantastic. Having previously worked with another specialist within the industry, I can honestly say that Source Advisors go above and beyond for their clients and the results speak for themselves.

Angus Elphinstone | CEO and Founder, AnyVan Ltd

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Identifying exactly what qualifies as R&D is not easy. We’d claimed ourselves twice before, but the experts almost doubled the value of what we received.

Stanley Wilson | CEO, Urban Cottage Industries

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I liked the way my analyst understood our company’s activities and which ones qualified for the R&D scheme.

Paul Riley | Managing Director, Computer Controlled Solutions Ltd

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…extremely efficient and able technical analyst, who asked the relevant questions…

Sue Goodchild | Managing Director, Goodchild Marine

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R&D tax credits | Patent Box
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Source Advisors skilled IP professionals have subsequently identified patentable elements around process developments which will ultimately enable us to broaden the scope of revenues that go into our annual Patent Box claim.

RL Hartshorn | Managing Director, HL Plastics Limited

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Being able to claim money back from the taxman for work we did to advance our internal manufacturing processes as well as the end customer experience is very welcome.

Andrea Rodney | Managing Director, Hone-All Precision Ltd

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Source Advisorsinvestigative work is impressively thorough and in depth. I would highly recommend them.

Paul Mousley | Project Manager, Quartz Technical Services Ltd

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We are so pleased with the Source Advisor service that we now introduce companies within our network.

Andrew Maley | Managing Director, Tracware Ltd

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R&D tax credits | Patent Box
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…we were able to “relax”, knowing their Analyst’s technical knowledge gave us the best chance for successful IPO patent grant…

Clive Paul | Managing Director, TES Ltd

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My words of advice would be; you may think that only scientific or manufacturing type companies qualify for R&D tax credits but that couldn’t be further from the truth.

Martyn Jupp | CEO, Veriserv Ltd

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The information they gave us and support along the way was excellent. They are a very good partner.

Mark Barrett | Managing Director, Warden Plastics

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Are R&D tax credits available to companies in my sector?

We find that companies from many sectors and industries have the potential to claim UK R&D tax relief. Follow the link below to find out more.

Our understanding of the innovation lifecycle

The Patent Box is closely linked with R&D tax relief and a company can often claim tax relief under both schemes.

Source Advisors can offer you advice to maximise your claims across both schemes. Find out more about our IP services including Patent Box.

Innovation lifecycle showing the journey through R&D tax relief and credits, IP harvest, Patent Box and Patent landscaping

Contact us
to find out how you can make the most of your innovation


If the R&D project is subsidised. For example by a customer, a charity or a university.

State Aid

If your business has received, or has applied for, a grant or other form of support which is notifiable State aid for an R&D project.

Partner companies

You have a partner company if:

  • another company holds over 25% of your voting rights or capital

  • you hold over 25% of another company’s voting rights or capital

Connected companies

Your company is connected to another one if:

  • it holds over 50% of the voting rights in another company
  • another company holds over 50% of the voting rights in your company

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