R&D Tax Relief: 7 Steps to a Successful Claim in 2026

When looking at R&D Tax relief, the process of making a successful claim can be difficult, particularly when navigating HMRC’s submission requirements; it is vital to find the right balance between maximising a claim whilst adhering to the complex legislation and rules.

1. Meet the core eligibility requirements

A strong claim clearly demonstrates your business's R&D work meets HMRC’s criteria. This includes specific activities that contribute directly to resolving scientific or technological uncertainties, such as:

• Experimentation, prototyping, modelling and testing
• Technical system design and development
• Failure analysis and iterative improvements

Claims should avoid including projects that HMRC classifies as “rarely eligible”, such as those by care homes, childcare providers, retailers, pubs, and restaurants, unless genuine technological challenges are present and evidenced.

Consider whether your R&D activities meet the criteria below: 

Scientific or technological advance

Work must aim to create or improve knowledge, capabilities, or processes in science or technology; work in arts, humanities, or social sciences are not eligible.

Scientific or technological uncertainty

The project must involve resolving uncertainties not easily solvable by a competent professional in the field.

Systematic experimentation

A valid project includes iterative testing, experimentation, design improvements, and problem‑solving steps that weren’t obvious at the outset.

Trade relevance

All R&D work must relate directly to the company’s ongoing or intended trade.

2. Collate the qualifying costs

Collate the qualifying costs, ensuring that they reflect the level of work that was put into the eligible activity. A credible R&D claim includes only allowable expenditure, such as:

• Staff costs (salaries, NIC, pensions)
• Externally provided R&D workers
• Qualifying subcontracted R&D
• Consumables and materials
• Software, cloud computing, and data licence costs relevant to R&D

Costs should be supported by:

• Timesheets or time‑allocation methods
• Payroll data
• Invoices and purchase records
• Evidence linking expenditure to claimable R&D activities

Make sure your claim also applies the various rules surrounding such areas as subcontractor costs correctly.

3. Maintain robust records

A high‑quality claim will demonstrate excellent and contemporaneous documentation, including:

• Testing results and prototypes
• Timesheets or effort‑tracking systems
• Cost breakdowns linked to activities
• Project plans or Gantt charts
• Engineering notebooks and/or development logs
• Contracts for subcontracted or contracted‑out R&D

Keep a good record of the R&D activity itself and the costs information. In the event of an enquiry into your claim from HMRC, this will help present a strong case to an inspector. Doing these actions now will save you much more hassle than retrospectively gathering information. 

Consider using a project management tool or using specific cost codes/ledgers to track R&D costs.

4. Correct scheme use based on accounting period

A compliant claim uses the correct scheme:

• Old SME/RDEC rules only apply for periods beginning before 1 April 2024.
• Merged scheme applies to periods beginning on or after 1 April 2024.

Incorrect scheme selection could lead to HMRC adjustments or enquiries. Factors such as the size of a company and whether its R&D activity has been grant funded can affect this. Depending on the company’s circumstances, some claims can be split between the two schemes.

5. Contracted‑out R&D: compliance with new rules

One of the most significant changes since 1 April 2024 relates to the contracted‑out R&D rule:

• If a UK company contracts R&D to another UK company, the customer is usually the claimant.
• The contractor can only claim where the customer is overseas or not within UK corporation tax.

Our blog on new contract R&D rules covers these changes in more detail. 

A strong claim provides:

• Contracts showing responsibility for technical direction and risk
• A clear explanation of why the claimant is entitled under the new rules

6. Overseas R&D restrictions

Under the merged scheme, most overseas R&D costs are disallowed unless all the following “Qualifying Overseas Expenses” conditions are met:

1. Necessary conditions (environmental, legal, regulatory, etc.) are not available in the UK.

2. These conditions exist in the overseas location.

3. It would be wholly unreasonable to reproduce them in the UK.

Acceptable evidence includes correspondence with regulators, scientific feasibility assessments, or environmental confirmations.

7. High-quality technical narratives

HMRC has intensified compliance checks. Strong claims include:

• A clear project description setting out the “scientific or technological advance” that you set out to achieve. This might include project ideas, feasibility studies or the main business aim of the projects.
• The uncertainties faced and why they were challenging and couldn’t be solved using existing knowledge or established techniques. Ideally, you should evidence the research undertaken into existing knowledge and explain why it would not solve the uncertainties you attempted to solve.
• The experimental approaches taken during the project. It must show how you attempted to solve the uncertainties.
• Evidence of iterations, failures, and technical decision‑making

Summary checklist for a strong claim

A thorough claim will:
1. Demonstrate a genuine scientific/technological advance 
2. Evidence real scientific/technological uncertainty
3. Present systematic experimentation and technical progress
4. Include only qualifying, well documented costs
5. Correctly apply contracted out and overseas R&D rules
6. Provide strong technical and financial evidence
7. Use the correct scheme for the accounting period
8. Maintain a complete audit trail for HMRC review

If you're unsure whether your company's R&D claim will meet HMRC's expectations, Shorts’ Radius Team can help. We have helped hundreds of companies make a successful claim and between them obtain millions of pounds in tax savings through this relief. We manage the process, working to collate the information, ensure that the claim is as robust as possible (whilst still being maximised) before submitting them to HMRC on the company’s behalf.

If you would like to find out more about your business could look to make a successful claim, please do not hesitate to contact us.