Sources: HMRC approach to R&D tax reliefs and R&D tax credits statistics. Claims fell 26% to 46,950 in 2023-24.
R&D tax relief for startups, on a fixed fee.
We work out whether your project qualifies, build the claim from the evidence, file it with the forms HMRC now requires, and defend it if HMRC asks questions. The price is agreed in writing before we start.
How HMRC checks R&D claims
17%of claims checked in 2023-24, up from 10%
77%of those checks ended in an adjustment
500+HMRC staff on R&D compliance, from about 100 in 2020-21
−41%first-time claimants in 2022-23, a fourth fall in a row
We prepare and file UK R&D tax relief claims for startups under the merged R&D expenditure credit and Enhanced R&D Intensive Support, for a fixed fee agreed before work starts, which does not depend on the size of the credit. That includes deciding what qualifies, costing it, writing the technical narrative, submitting the claim notification and additional information form on time, and handling any HMRC enquiry.
For several years, cold callers promised R&D relief for work that did not qualify, and some firms took a large share of the credit for a narrative written from a template. HMRC responded by checking far more claims. The number of claims then fell, and many of the founders who stopped claiming had work that did qualify.
Both followed from claims being priced as a commission on the credit. We charge a fixed fee for the professional work in a claim.
The two R&D relief routes
| Merged R&D expenditure credit | Enhanced R&D Intensive Support | |
|---|---|---|
| Who it is for | Everyone else, including profitable companies | Loss-making SMEs whose qualifying R&D is at least 30% of total relevant expenditure |
| How it works | A credit of 20% of qualifying spend, and the credit is taxable | An extra 86% deduction (186% total), surrendered for a payable credit at 14.5% |
| What you actually keep | About 15p per £1 at the main rate, 16.2p loss-making or small-profits | Up to about 26.97p per £1, if the trading loss is large enough |
| On £220,000 of qualifying spend | roughly £35,640 | roughly £59,334 |
| If the PAYE cap is exceeded | The excess is carried forward | The credit is capped, and the unused loss is carried forward |
The intensity test adds together connected companies, so a spinout that is part of a group can fail it on the group's figures. There is also a year of grace. A company that claimed the intensive route for its previous 12-month period, and met the 30% test then, can use it for the next period even if it falls below 30%.
The payable credit is capped at £20,000 plus 300% of your PAYE and National Insurance for the period, unless the company meets the exemption. The cap has most effect where engineers invoice through their own companies instead of being on the payroll. Put your own numbers through the estimator to see which route you are on and whether the cap applies.
What counts as R&D for tax
A project qualifies if it sought an advance in science or technology by resolving uncertainty that a competent professional in the field could not readily work out. The advance has to be an advance in the field. An advance for your company alone, or something that is only new commercially, does not count.
Ask your technical lead this question. On this project, was there a point where nobody knew whether it could be done at all, and you had to run experiments to find out? If yes, and somebody wrote down what was tried and what failed, you have the basis of a claim. A project that was simply a lot of hard work does not qualify.
Usually qualifies
- Algorithms with no published solution
- Performance at a scale where the standard architecture demonstrably falls over
- Integrations that required experiment, failure and redesign
- Machine learning where it was unknown at the outset whether the approach would function
- Materials and process development where iterations failed
Usually does not
- Standard web and mobile apps on mature frameworks
- Interface design and styling
- Configuring off-the-shelf software
- API integrations that worked as documented
- Data migration, and testing that was hard rather than uncertain
A fixed fee and a percentage fee compared
| Qualifying spend | Our fixed fee | 15% of the credit, merged scheme | 15% of the credit, intensive route |
|---|---|---|---|
| Under £50,000 | £1,500 + VAT | £1,495, the minimum fee | £1,495 to £2,023 |
| £50,000 – £150,000 | £2,500 + VAT | £1,495 to £3,645 | £2,023 to £6,068 |
| Over £150,000 | £3,500 + VAT | £3,645 and rising with the claim | £6,068 and rising with the claim |
Why it is a fixed fee
A percentage fee pays the adviser more for a bigger claim, at a time when HMRC is checking a large share of claims and most checks end in an adjustment.
With a fixed fee, what we are paid does not depend on how much of your work we say qualifies. Every band includes any HMRC enquiry into the claim.
The two R&D claim deadlines
- 1Claim notification — six months after the end of your period of account
If this is your first claim, or you have not claimed in the previous three years, you must notify HMRC. A company whose year ends on 31 March must notify by 30 September. If you miss it, you cannot claim for that year (HMRC guidance).
- 2Additional information form — before, or on the same day as, the company tax return
Every claim needs one. If you send the tax return first, HMRC writes to say it has removed the R&D claim from it (HMRC guidance).
- 3Then the claim itself
We cost the claim, write it and file it with the return. The technical narrative is written from what your engineers actually did.
What the fixed fee covers
- A clear answer on whether the work qualifies, before you commit to anything
- The intensity calculation that decides your route, done at the start
- The cap based on your PAYE and National Insurance worked out before the credit goes into your cashflow forecast
- Costs built from your payroll and accounting records
- The technical narrative written with your engineers
- Claim notification and the additional information form filed on time and in the right order
- Any HMRC enquiry into the claim handled
R&D questions founders ask
How much do you charge for an R&D claim?
£1,500 + VAT where qualifying spend is under £50,000, £2,500 + VAT from £50,000 to £150,000, and £3,500 + VAT above that. Every band covers the whole job including any HMRC enquiry. The fee is agreed before we begin and is not a percentage of your credit, so it stays the same if the claim turns out larger than expected.
Why does a percentage fee matter?
A percentage fee pays the adviser more for a bigger claim, at a time when HMRC is checking a large share of claims and most checks end in an adjustment. With a fixed fee, what we are paid does not depend on how much of your work we say qualifies.
Does my startup actually qualify?
The test is whether a project sought an advance in science or technology by resolving uncertainty that a competent professional in the field could not readily work out. The advance has to be new to the field as a whole. Work that is only new to your team, or only new commercially, does not count. Building a standard web app with mature frameworks does not qualify, while getting a system to work at a scale where the usual architecture demonstrably fails often does. We tell you whether your project qualifies before anyone starts writing the claim.
When do we have to tell HMRC we plan to claim?
If this is your first claim, or you have not claimed in the previous three years, you must send HMRC a claim notification within six months of the end of your period of account. The two-year window for amending a company tax return does not extend this. The notification deadline falls eighteen months earlier, and a claim made without the notification is invalid and cannot be put right. Talk to us before your year end.
What happens if HMRC opens an enquiry?
We handle it, and it is included in the fixed fee. We only put work in a claim that we are prepared to defend to HMRC.
Can I claim if the work was grant funded?
Yes. The merged scheme removed the old restriction on subsidised expenditure, so grant funding no longer reduces your claim the way it used to. This matters most to companies funded by Innovate UK or other grant bodies.
Can I claim for developers based overseas?
Often not, if they are contractors or agency workers. For accounting periods beginning on or after 1 April 2024, payments to contractors and for externally provided workers doing R&D outside the UK are excluded unless the work needs conditions that are not present in the UK and that it would be wholly unreasonable to replicate here, such as geography, environment, population or legal requirements. Cost and the availability of workers do not count. The company's own employees working abroad are not caught by this rule, and Northern Ireland SMEs claiming the intensive route are exempt from it unless they opt out. We check how this rule affects your team before the claim is built.
