How research and development tax credit works
Research and development tax credit (and R&D tax relief) is a government-backed incentive that reduces your tax bill or gives you a credit when you spend on qualifying research and development. The idea is to encourage innovation by rewarding companies that take on technical uncertainty—trying to achieve something that is not readily deducible or achievable by a competent professional in the field.
Qualifying activities and technical uncertainty
Not all R&D qualifies. Tax authorities look for work that seeks an advance in science or technology and that involves resolving scientific or technological uncertainty. The advance must be in the field as a whole, and the uncertainty must be such that a competent professional could not readily deduce the answer. Day-to-day product tweaks or routine development usually do not qualify; genuine R&D does. The exact wording and tests differ by region—UK (HMRC), UAE, Ireland (Revenue)—so it is important to apply the right rules for your jurisdiction.
Qualifying R&D typically requires an advance in science or technology and resolution of technical uncertainty. Check the rules that apply in your region.
Claim process and evidence
Once you have qualifying R&D, you typically claim by including the relief in your tax return or via a separate R&D tax credit claim. You need to identify qualifying activities, quantify qualifying expenditure (staff, subcontractors, materials, etc., depending on the regime), and keep evidence that supports both the technical narrative and the costs. Authorities may enquire or review, so contemporaneous documentation is important.
For more on how we support the claim process and documentation, see our Documentation systems and Pre-launch preparation services.
For region-specific rules—including how much is R&D tax relief and who is entitled—see R&D UK, R&D Dubai, and R&D Ireland.
Related topics
For an overview of legislation, see R&D tax credit legislation. For who is entitled and how much is R&D tax relief, explore the links below.