How Will I Receive My R&D Tax Credit?

Before answering the question “how will I receive my R&D tax credit?”, it helps to understand the basics of the scheme.

The R&D tax credit allows UK companies that have spent money on qualifying research and development to claim a deduction or credit through their Corporation Tax return. 

The key test is whether your company has sought to achieve an advance in science or technology and faced uncertainty in doing so. If you can demonstrate this and provide evidence of eligible expenditure (such as staff costs, subcontractor fees, and materials used in R&D), you may be entitled to claim.

How to Get R&D Tax Credit: The Claim Process

To access the benefit, you must first submit a claim. This is done through your company's Corporation Tax return (CT600), supported by a detailed R&D report that sets out your qualifying projects and costs. The steps typically look like this:

• Identify eligible projects and expenditure: analyse your R&D activity in line with BEIS guidelines. For a detailed breakdown of eligible cost categories, check out our guide on what qualifies as R&D expenditure.
• Prepare a supporting report: explain the technological or scientific advances sought, the uncertainties faced, and how the project(s) qualified.
• Calculate your enhanced deduction or credit: apply the correct scheme (SME or RDEC) and work out the additional relief available to the company.
• File the claim with HMRC: include the figures on your CT600 and submit the supporting documentation.

Only once this process is complete HMRC will assess the claim and follow your instruction on how the benefit is delivered. 

How You May Receive Your R&D Tax Credit

1. Reduction in Corporation Tax Liability

If your company made a taxable profit during the accounting period, the R&D tax credit is normally used to reduce your Corporation Tax bill.

For example:

Profit before R&D relief: £300,000
Corporation Tax at 25% before R&D: £75,000
Qualifying R&D costs: £150,000
RDEC (20%): £30,000
Revised profit including RDEC: £330,000
Corporation at 25%: £82,500
Less RDEC: (£30,000)
Net Corporation Tax payable: £52,500

In this scenario, the business receives its benefit by paying £22,500 less in Corporation Tax. While no money is transferred directly into the company bank account, this saving improves the company's cash position.

2. Cash Repayment (Tax Credit Payable)

If your company is loss-making, or if your R&D claim creates a loss, you may be able to surrender that loss for a cash repayment from HMRC. This is particularly valuable for start-ups and businesses that are investing heavily in development before generating profits.

This a simplified example of who a refund would work:

Trading loss before R&D relief: £100,000
Qualifying R&D costs: £50,000
Additional R&D relief (86%): £43,000
Total enhanced loss: £143,000
Loss surrendered for a repayable credit (at 14.5%): £13,485 cash

HMRC will pay this amount directly into your company's bank account once the claim is processed. Although it is taxable income in future years, it provides a real-time injection of cash when many businesses need it most.

What if My Company Is Claiming Loss Relief?

Many early-stage or heavily investing businesses do not make a profit, meaning loss relief becomes an important part of the R&D tax credit strategy.

If your company has made a trading loss, you have two main choices when claiming R&D-related relief:

Carry the Loss Forward or Back

You can choose to carry your R&D-enhanced trading loss forward to offset against future profits, or in some cases carry it back to offset against profits from earlier years.

• Carry forward: The loss is used against future Corporation Tax liabilities, reducing tax due in later years.
• Carry back: You may be able to set the loss against profits from the previous year (or years in some cases), which can result in a Corporation Tax refund for those earlier periods.

In both cases, the relief comes back as a tax reduction or repayment, rather than an immediate cash injection. It will be necessary to evaluate which rates of tax the company pays at in all available tax years to make best use of the R&D tax credit.  

Choosing the Best Option

The right choice depends on your company's circumstances:

• If you expect future profits soon, carrying losses forward may produce a greater long-term saving.
• If cashflow is tight, surrendering for a payable credit can provide an immediate benefit, even if it's slightly lower in value overall.

A professional adviser can model both options to see which gives your company the best outcome.

How Long Does It Take to Receive the Credit?

Once your claim is filed, HMRC generally aims to process it within 40 days, though in busier periods it can take longer. If you are expecting a repayment, HMRC can transfer the money directly to your nominated business bank account.

The timescale can depend on:

• The accuracy and completeness of your claim.
• Whether HMRC chooses to open an enquiry or request additional information.
• How straightforward your company's overall tax position is.

Well-prepared claims with clear supporting evidence usually move more quickly.

Common Issues That Delay Receiving R&D Tax Credits

While the process sounds simple, many businesses experience delays. Typical reasons include:

• Incomplete or vague reports – failing to clearly explain the R&D work undertaken.
• Errors in calculations – particularly where subcontractor costs, overseas expenditure, or capital items are involved.
• Mismatch between CT600 and R&D schedules – HMRC will not process a claim if the figures don't align.
• Bank details not provided or incorrect – for companies expecting repayment.

Getting specialist advice is often the best way to avoid these pitfalls and ensure the credit reaches you quickly.

Common Mistakes to Avoid

• Claiming for projects that don't meet HMRC's definition of R&D.
• Overlooking eligible indirect costs.
• Submitting insufficient technical evidence.
• Missing deadlines – some companies may be required to notify HMRC of an intention to claim within 6 months of the end of the accounting period. 

Using an Adviser to Maximise the Benefit

Understanding how to get R&D tax credit is only part of the picture. The other key question is whether your business is claiming the maximum relief available. Many companies underclaim simply because they are unaware of all the costs that qualify or because they present their projects in a way that doesn't fully meet HMRC's expectations.

An R&D tax adviser can:

• Review your projects and identify all qualifying expenditure.
• Draft a clear and compliant technical report to support your claim.
• Calculate the claim under the correct scheme (SME or RDEC).
• Liaise with HMRC to ensure a smooth process.

By doing so, they not only speed up the payment but also increase the overall benefit your business receives.

Key Takeaways: How Will You Receive Your R&D Tax Credit?

• If your company is profitable, the R&D tax credit usually reduces your Corporation Tax liability.
• If your company is loss-making, you can surrender losses for a cash repayment directly into your bank account.
• Loss relief can be carried forward, carried back, or surrendered for a payable credit, depending on your company's circumstances.
• HMRC generally processes claims within 40 days, but accuracy and detail are crucial to avoid delays.
• Preparing a robust claim – or working with an adviser – is the best way to ensure you get the maximum benefit from the scheme.

So, if you're wondering not just how to get R&D tax credit, but how the money actually comes back to you, the answer is clear: either by paying less Corporation Tax, by receiving a direct cash payment from HMRC, or by surrendering losses for a repayable credit. In all cases, the scheme is designed to strengthen your company's cashflow and support further innovation.

Frequently Asked Questions About R&D Tax Credits

Q1: How do I receive my R&D tax credit?
You can receive your R&D tax credit in three ways: by reducing your Corporation Tax bill, receiving a cash repayment from HMRC if you're loss-making, or claiming loss relief.

Q2: Can loss-making companies get cash from HMRC?
Yes. If your business makes a loss, you can surrender it in exchange for a repayable R&D tax credit. HMRC pays this directly into your company bank account.

Q3: How long does it take to get an R&D tax credit?
HMRC typically processes R&D tax credit claims within 4–6 weeks for straightforward cases, though more complex claims may take up to 12 weeks or longer.

Q4: What documents do I need for my R&D claim?
You'll need a technical report describing your qualifying R&D projects, a breakdown of eligible costs (such as staff, subcontractors, and materials), and accurate figures submitted on your CT600 Corporation Tax return.

Q4: Do I need a specialist adviser to claim?
It's not mandatory, but using an R&D tax adviser can reduce delays, strengthen your claim with the right evidence, and ensure you receive the maximum relief available.
 

Conclusion: How Will You Receive Your R&D Tax Credit?

Understanding how HMRC delivers your R&D tax credit is key to planning cashflow and maximising the benefit. Whether your company reduces its Corporation Tax bill, receives a direct cash repayment, or uses loss relief for greater savings, the scheme is designed to reward innovation and ease financial pressures.

Well-prepared claims supported by clear documentation are usually processed within 40 days, but delays are common when submissions are incomplete or unclear. Working with an experienced R&D tax adviser can help ensure accuracy, speed up HMRC's processing time, and secure the maximum relief available.

Ultimately, your R&D tax credit will arrive in one of three ways — as a tax reduction, a cash repayment, or through loss relief — but in every case, it strengthens your business's ability to invest, grow, and innovate with confidence.

If you think your business can make a claim, our detailed guide on how to claim R&D tax credit explains the process step by step.. Feel free to get in touch to understand the benefit to your business.

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