One of the biggest reasons businesses miss out on R&D tax credits is because they assume their work doesn’t qualify. In reality, HMRC’s definition of research and development is much broader than you might think. If your business is solving problems, improving processes, or creating something new, you could be eligible.
The HMRC Test
For a project to qualify, it must:
1. Seek an advance in science or technology.
2. Involve uncertainty—where the solution isn’t obvious.
3. Be something a professional in your field couldn’t easily work out straight away.
Surprising Examples
It’s not just about inventing the next iPhone. Here are some examples across industries:
• Construction: Developing a new way to make concrete stronger but lighter.
• Food & Drink: Creating a gluten-free product that tastes like its standard version.
• Manufacturing: Improving a production line to cut waste and increase efficiency.
• Software Development: Building a system that integrates two platforms in a way that hasn’t been done before.
Costs That Qualify
When working out an R&D claim, the following types of costs can often be included:
• Staff wages and salaries for employees working on the project
• Materials and consumables used for testing and development
• Software licences required for the R&D
• Payments to subcontractors and external specialists
Mini example:
Your small food company spends:
• £40,000 on staff time
• £10,000 on testing ingredients
• £5,000 on specialist software
= £55,000 total eligible costs
Depending on your company’s tax position, you could receive £10,000–£15,000 back.
Why Businesses Miss Out
Many owners think:
• “We were just improving something, not inventing.”
• “We didn’t succeed, so it won’t count.”
But even unsuccessful projects can qualify—because the scheme rewards the attempt to push boundaries, not just the result.
Takeaway
If your business is solving problems, testing new ideas, or improving how things are done, you may be doing R&D without realising it. The best way to check is to talk it through with an advisor—chances are, you’re closer to qualifying than you think.
Set Yourself up for Success
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Book your 30 minute discovery call today— enjoy a relaxed, no-obligation chat with one of our qualified accounting advisors. We can assess your situation and determine how to best serve and add value to your business.
Alternatively, you can send us a message with any queries (big or small), and one of our team members will get back to you promptly.
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