Maximising Your R&D Tax Credit: Tips for Businesses

Once you are confident your company is eligible for R&D tax relief and you understand how to get R&D tax credits, you will want to quantify the cash benefit to the business. 

Many companies underclaim or make mistakes that reduce the value of their tax relief. If you want to make sure your business gets the full benefit, here are the top tips to maximise your R&D tax credit claim.

Tip 1: Understand What Projects Qualify as R&D

To qualify, R&D activities must:

  • Be part of a project – it helps to have a defined plan that sets out how the project plans to advance its knowledge.
  • Seek to resolve scientific or technological uncertainty.

Tip to maximise your claim: Even if a project failed, a company still claim. If your business has attempted to resolve scientific or technological uncertainty but was unsuccessful, the costs attributed to these projects can be claimed as R&D expenditure on the company tax return. 

Tip 2: Track All Eligible Costs

The expenditure must be revenue in nature (although capital expenditure may benefit from capital allowances).

The expenditure must also be deductible as a trading expense of the company. 

R&D relief is based on qualifying expenditure, so the more accurately you track your costs, the larger your claim will be.

Eligible costs often include:

  • Staff costs (salaries, employer's NIC, and pension contributions)
  • Subcontractors
  • Externally provided workers
  • Software costs
  • Consumables/transformable items
  • A portion of utilities, such as power and water.
  • Data licenses and cloud computing costs (for accounting periods beginning on or after 1 April 2023)

Tip to maximise your claim: Where revenue R&D expenditure has been capitalised as part of an intangible asset on the balance sheet, the R&D expenditure can be claimed in full in the year when it is incurred. This can be a significant benefit for those companies which are required to capitalise intangible assets for accounting purposes.  

Tip 3: Include Indirect Costs

Activities that form part of the R&D project, but which do not directly contribute to the resolution of scientific or technological uncertainty, may be ‘qualifying indirect activities'.

This could be training to support an R&D project, or indirectly supporting activities such as maintenance, administration, personnel or finance that are undertaken for the purpose of R&D. Ancillary activities that are essential to the undertaking of R&D can also qualify. 

Tip to maximise your claim: If your business is using a third party to take on and pay R&D staff, the cost of these third-party services may qualify for R&D tax credits. 

Further details regarding eligible costs can be found here. 

FAQs on Maximising R&D Tax Credits

1. How can my business maximise its R&D tax credit claim?
Carefully identify all eligible projects, keep detailed records, include indirect contributors, and prepare a strong technical narrative to support the claim. Working with a specialist often uncovers additional costs that can be claimed.

2. What costs should I include to increase my R&D tax credit?
Eligible costs include staff salaries, NIC, pension contributions, subcontractors, externally provided workers, software licences, consumables, and a proportion of utilities.

3. How do records help maximise R&D tax credits?
Detailed records (e.g. invoices and project notes) allow you to justify costs to HMRC and ensure no qualifying expenditure is missed.

4. Can expert advice help me get a bigger R&D tax credit?
Yes. R&D advisers can identify overlooked projects and costs, improve technical narratives, and ensure your claim is both maximised and HMRC-compliant.

5. What mistakes could reduce my R&D tax credit claim?
Missing deadlines, failing to include all eligible contributors, misunderstanding what qualifies as R&D, and submitting weak technical explanations are the most common pitfalls.

Final Thoughts

If you're wondering how to get R&D tax credit and, more importantly, how to maximise it, the key lies in preparation, detail, and expertise. Done correctly, R&D tax credits can provide a valuable cash boost to reinvest in your people, projects, and growth.

Next step: If you'd like an expert review of your current or past R&D claims, please get in touch. Many companies are surprised to discover they've been underclaiming for years.