R&D Tax Relief: You Don’t Have to be an R&D Company to Claim

When you hear "R&D”, you might picture a lab-coated team in a dedicated research facility or a university spin-out pushing the boundaries of science or technology. But according to new research commissioned by HMRC, that picture only tells part of the story.

A Broader Base of Innovation Than You Might Think

HMRC’s independent study, linked at the end of this article, explored the types and locations of companies claiming R&D tax relief or using the Patent Box. Unsurprisingly, there’s a geographic concentration of claimants in London and the South East. But the more revealing insight is that only 10% of surveyed businesses within the small or medium enterprise bracket described themselves as “pure” R&D companies.

The vast majority of respondents were not focused solely on R&D but saw it as a regular and continuous part of what they do. Some 30% of business surveyed stated they carry out R&D on a project-by-project basis, when the opportunity arises.

These finding underscores an important point: you don’t need to be a undertaking R&D all of the time to be eligible for the tax relief.

Could You Be Missing Out?

Margaret Savory, R&D Tax Consultant at James Cowper Kreston, commented “Many companies overlook the opportunity to claim simply because they don’t see themselves as doing “pure R&D”. But the bar isn’t about your industry or business model—it’s about the work you do. To qualify for R&D tax relief, a project must aim to advance science or technology by overcoming uncertainty. That could be a new or improved product, a bespoke manufacturing process, or a software tool that solves a technical problem in a novel way. If your team is solving problems others can't easily solve - and documenting the effort - then you might be able to claim this valuable tax relief.”

Check Every Year

The key takeaway? R&D tax claims should be part of your annual tax planning. Even if innovation isn't your core business, you should review each year whether any of your projects meet the criteria. It could reduce your Corporation Tax liability - or even result in a cash repayment.

If you’re unsure whether your business could qualify, let’s talk. We help companies identify eligible R&D activity and make robust, compliant claims that unlock real value. Click here to speak to a member of our R&D Tax Relief team, so that we can help maximise your potential.

Click here to read HMRC's Executive Summary: Regional Information on Corporate Tax Reliefs.