By Amin Taheri on Growth Business – Your gateway to entrepreneurial success
- The main R&D tax relief schemes are now well established, but rates are lower for many businesses.
- Fewer businesses claiming does not necessarily mean less R&D is taking place, and businesses should not assume from the headlines that the relief is no longer worthwhile.
- For most companies, the merged scheme provides a 20% taxable R&D Expenditure Credit (RDEC), which can translate into around a 15% net benefit for many profitable businesses, depending on their circumstances.
- There is no statutory minimum level of R&D expenditure required to claim, but there is a practical question of whether the potential benefit justifies the cost and effort involved. As a broad guide, a business spending £50,000 or more on potentially qualifying R&D should consider having its position assessed.
There have been significant changes to the UK’s research and development (R&D) tax relief regime in recent years. The main R&D tax relief schemes are now well established, but rates are lower for many businesses. Additional reporting requirements introduced in recent years have also had time to bed in.
So, it is unsurprising that some businesses may be wondering whether R&D tax relief is still worth the effort of claiming. But as the dust settles, there is a more positive story to tell.
The relief remains significant and while HMRC’s reforms have improved the integrity of the regime, businesses investing in genuine R&D should not assume that the opportunity has disappeared.
Latest figures
R&D tax relief remains a substantial government incentive. HMRC’s latest Annual Report shows £8 billion was spent on R&D tax reliefs in 2025-26, underlining the continuing scale of the support available to innovative businesses. HMRC also reported that 90% of payable R&D claims were processed within 40 days, exceeding its 85% target.
Yet the latest published claims statistics, covering 2023-24, show a 26% fall in R&D claims to 46,950, including a 31% fall in SME claims, while qualifying R&D expenditure fell by only 1% to £46.1 billion. The contrast is striking – claim numbers have fallen much faster than the R&D expenditure reported through the schemes.
The detail is also revealing. HMRC reports that the largest falls have been among smaller-value claims, while the average claim value increased by 33%. The reduction in claim numbers is therefore not just a story of businesses abandoning R&D. It also reflects a change in the composition of the claimant population.
At the same time, HMRC’s measures to improve compliance have delivered measurable results. The estimated overall rate of error and fraud fell from 9.9% in 2022-23 to 5.9% in 2024-25. The reduction suggests that the reforms are achieving one of their central aims: improving the quality of claims and reducing error and fraud.
There are also signs of a change in tone. In July 2026, HMRC published new material specifically designed to help businesses understand whether they may qualify for R&D tax relief. The guidance highlights that thousands of SMEs already benefit from the relief and explains that a project does not necessarily have to succeed for relief to be available.
This is particularly interesting given that HMRC research has previously found that 51% of non-claiming SMEs said they did not know R&D tax relief existed. Awareness and understanding remain important parts of the picture.
The message is not that every business should claim. Rather, fewer businesses claiming does not necessarily mean less R&D is taking place, and businesses should not assume from the headlines that the relief is no longer worthwhile.
The opportunity has changed, not disappeared
For most companies, the merged scheme provides a 20% taxable R&D Expenditure Credit (RDEC), which can translate into around a 15% net benefit for many profitable businesses, depending on their circumstances. For loss-making, R&D-intensive SMEs, enhanced R&D intensive support (ERIS) can provide substantially greater support, with a potential cash benefit of around £27,000 for every £100,000 of qualifying R&D expenditure, subject to the detailed rules, including Pay As You Earn (PAYE)/National Insurance Contributions (NIC) cap.
There have also been positive developments since the reforms were introduced. In May 2026, HMRC launched a targeted advance assurance pilot, allowing eligible SMEs to seek clarity on specific complex or high-risk areas of a potential R&D claim before submitting it. The pilot is intended to provide greater certainty while maintaining appropriate safeguards against error and fraud.
The picture, therefore, is more balanced than the headlines might suggest. The relief is less generous for many businesses, but it remains financially meaningful. At the same time, compliance has improved, processing performance is strong, and HMRC is introducing measures intended to improve certainty and awareness.
Should you make a claim?
There is no statutory minimum level of R&D expenditure required to claim, but there is a practical question of whether the potential benefit justifies the cost and effort involved. As a broad guide, a business spending £50,000 or more on potentially qualifying R&D should consider having its position assessed.
At £100,000, £250,000 or more, the potential benefit can become increasingly material. The level of net potential relief should therefore be considered alongside the R&D investment and the work involved in preparing a robust claim.
R&D tax relief is also only one part of the wider tax and investment picture. Depending on the business and its activities, there may be opportunities through capital allowances, grants, Patent Box and other incentives. Taking a broader view can help identify the most relevant support rather than considering R&D relief in isolation.
With further discussion around R&D support possible in the 2026 Autumn Budget, there may be more changes ahead. However, after several years of substantial reform, businesses should make decisions based on the regime as it stands rather than waiting for the next announcement. Greater stability and certainty may ultimately be more valuable than another wholesale redesign.
If your business is developing new products, processes, software, materials or technologies, it may be worth taking a fresh look at the position. Not every business will qualify, and not every claim will be worthwhile. But for businesses already investing meaningfully in innovation, the opportunity remains worth exploring.
Amin Taheri is R&D technical senior manager at Kreston Reeves.
Read more
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