R&D Tax Credits for UK Companies
Is your company innovating a process or product in your sector? Maybe you’re working on game-changing software, or perhaps you’re using new tech or materials in your manufacturing processes.
Research and development (R&D) tax credits allow companies like yours to be partially reimbursed for investing in new products and services.
- Loan from £25k to £5 million +
- Trusted by 500+ UK business owners
- Same day decisions
- Bad credit accepted
- Flexible repayment terms
Funding Guru’s Research & Development Tax Credit
Being innovative allows companies and the UK to stay competitive and to deliver solutions to challenges facing society and the wider economy. But investing in new solutions can be expensive, so the government’s financial incentive reduces the cost to your business.
The issue with any type of government funding is the red tape, which can cause delays in you receiving the finding you’re entitled to. Funding Guru can help.
With the typical time from application to funding being at least two months, many research-focused businesses can experience cash flow issues when waiting around for tax credit approvals. With Funding Guru, we can forward a % of a tax credit loan, so your business can get back to innovating sooner.
There have been significant changes to R&D tax credits in recent years, we’ll explain how the UK’s R&D tax credits work, how to apply and how you could get an R&D tax credit loan through Funding Guru.
Costs Your Business Can Claim for R&D Tax Credits
A Proportion of Staff Salaries
If your employees are directly involved in research and development of new products or technologies, or overseeing the project (eg: supervisors and project managers) their salaries can be included in your R&D claim.
Externally Provided Workers
If your research relies on external contractors or freelancers to function, their invoices can be added to your R&D claim - but only if they’re based in the UK.
Materials & Utilities
Let’s say your research requires you to use a lot of electricity or water to produce – you can claim these costs back on your R&D tax credit. Same goes for materials that you may need to use in production.
Cloud Computing
Hosting and storage costs can now be claimed for in your R&D tax credits. This is great for SaaS innovators that are looking to save on their costs.
What are R&D Tax Credits?
Research and development (R&D) tax credits are a government tax relief scheme to encourage innovation in UK businesses – specifically in scientific and technological developments. R&D tax credits were introduced in 2000 and have changed significantly since 2023.
The scheme gives companies a financial incentive to invest in innovation. There are tens of thousands of R&D tax credits claims from UK companies each year, making the scheme a key form of support for UK entrepreneurs.
In 2024, the two R&D tax credit schemes (one aimed at larger companies, one for SMEs) merged into a simplified R&D credit scheme that more or less follows the previous research and development expenditure credit (RDEC) system.
However, the R&D Intensive scheme (for SMEs that spend over 30% of their total costs on research) still exists. Some experts reckon this will be brought under the merged scheme in the future.
Founder and CEO, Funding Guru
Thoughts from Matt
“Too many businesses fail to apply for R&D tax relief because they think they aren’t eligible or they aren’t even aware it exists. In fact, a large number of UK businesses are eligible for the scheme. By not applying, you lose out on free cash that could be put to good use to grow your business.
You can apply up to two years after the end of the financial year relating to the R&D spend. So it’s worth thinking about whether you meet the R&D tax credit criteria for historical years so you can get the benefits today.”
How do R&D Tax Credits Work & How Do I Apply?
Claiming R&D tax credits can be a game-changer for innovative businesses, but the process can feel complex if you’re new to it.
From understanding what qualifies as R&D to navigating HMRC’s requirements, each step is crucial to securing the funding you’re entitled to. Here’s a breakdown of how the process works – and how to give your application the best chance of success.
-
Assess How Much R&D You Can Apply For:
Evaluate where in your process you’re innovating and which costs are attached to those developments. Try to think outside of the box here – or better yet, bring in an expert who can help you to evaluate what you can include in your costs. -
Complete an Advance Notification Form:
If you want to claim for R&D tax credits, you need to let HMRC know at least six months before the end of the tax period you’re claiming for. You do this by submitting an Advance Notification Form. If you’re claiming for the period April 2025 - April 2026, for example, you'd have to submit your form at the latest by October 2025. -
Submit Your R&D Claim:
This is one of the more time-consuming elements of R&D tax claims - but taking your time to complete your application accurately can ensure you get the most of the funding available to you. Thousands of pounds can be on the line here - so take the extra time, or better yet - get an expert in to help you. -
Wait for Approval & Funding to Land:
HMRC aims to process most R&D tax relief claims within 40 days, but it can take significantly longer. Once your claim has been processed and approved, HMRC typically pays out within 28 days. From application to funds landing in your account, you’re looking at a two month lead time (best case scenario).
What is an R&D Tax Credit Loan?
R&D tax credits are a reliable form of income from HMRC, but the funding can be slow to materialise – not least because SMEs can only file for R&D tax credits at the end of their financial year.
That’s where R&D tax credit loans come in. If you want payment faster than HMRC timelines, you can look to alternative lenders to provide the money from the loan upfront, and repay within an agreed time frame, plus fees.
As a lender, Funding Guru takes your future tax credit payments as security against your loan. This means you can access the cash credit quicker for working capital or to invest in further innovation.
How Much Can I Borrow With an R&D Tax Credit Loan?
We advance a percentage of a future R&D tax credit refund, and the loan should be repaid once HMRC has processed your R&D tax credit claim and paid you the funds.
Let’s say your business is due to receive £50,000 in R&D tax credits, but you’re tangled in red tape and the funds aren’t going to land for the foreseeable. You could receive up to £40,000 (80%) of your R&D tax credit amount as a loan from Funding Guru in advance.
How do I Apply for an R&D Tax Credit Loan?
1. 60 Second Online Application
Unlike HMRC, we like to keep things simple. Simply enter your details into our online application form and we’ll get back to you.
2. Hear Back From Us Within 24 hours
Our typical application response time is less than a day, so you’re not going to be waiting around to know your options.
3. Approval & Contract Exchange
Our experts will provide you with clear information on your R&D tax credit loan and repayment terms upfront, so you can make your financial decisions with confidence.
4. Get Agreed Funds into Your Account in Days - Not Months
Innovation moves quickly, and you need cash fast. With Funding Guru, you can expect to go from application to funds in as little as 48 hours.
Is R&D Tax Credit Still Worth It?
Both large enterprises and SMEs now apply for the same R&D relief. There are two significant changes that impact impact companies R&D scheme is that
- The deduction for R&D expenditure has been reduced from 130% to 86%.
- For loss-making companies, your tax credit rate has decreased from 14.5% to 10%.
- For profit-making companies, your tax credit rates have increased from 13% to 20%.
Summary of R&D Tax Credit Change Impact for Profit Making Businesses:
Let’s say your profit-making business spends £100,000 on research and development each year. Before 2023, you’d have received 13% back on your spend (£13,000) now you receive 20% (£20,000). Both are subject to 25% corporation tax.
| Before 2023 | After 2023 | |
| R&D rate | 13% (£13,000) | 20% (£20,000) |
| Corporation Tax (25%) | £3,250 | £5,000 |
| Net Benefit | £9,750 | £15,000 |
| Difference | £5,250 more |
It’s actually more worthwhile applying for R&D tax credits as a profit-making business as you stand to gain an additional 7% pre corporation tax.
Summary of R&D Tax Credit Change Impact for Loss Making SMEs:
Using the same example, but this time you’re a loss-making company that spends £100,000 on research and development each year.
You used to receive 130% back on your spend (£130,000), after the rule change you get 86% (£86,000) back.
This is then subject to a change in your repayable tax credit, which has reduced from 14.5% to 10% – meaning you’re going to get less back in tax relief from a smaller pot to begin with.
| Before 2023 | After 2023 | |
| R&D Deduction | £230,000 | £186,000 |
| Tax Credit | 14.5% | 10% |
| Cash Back | £33,350 | £18,600 |
| Difference | £14,750 less |
So while almost £15k is welcome to any business in tax relief – it’s a net 44.2% drop in what you would have been used to receiving back from the government.
R&D Tax Credits Frequently Asked Questions
Does the company initiating research or the contractor receive R&D tax relief?
The general rule for R&D applications is that the company that initiates the project receives the relief as these are the innovators. For example, if you’re working on finding more sustainable clothing manufacturing processes, and outsource a contractor to provide a service within the process, you could add the cost of their work to your claim (as it was a cost incurred during the research & development process). The contractor wouldn’t get the same tax cut.
How can I tell what can be added to an R&D tax claim?
The government’s definition of ‘research and development’ is intentionally broad, so a lot of expenses can be included in your claim. Typically, operating costs, salaries and utilities can be included. If your business is in a more niche industry, or you’re just unsure on what can be added to your R&D claim, speak to an expert like Funding Guru to help your application.
Do I have to pay fees on an R&D tax credit loan?
Yes. Like any business loan, you will need to pay fees if you’re lending the money until your R&D tax relief comes in. At Funding Guru, we’re upfront about our repayment terms, fees and timelines, so you can make financial decisions with confidence. And we won’t penalise you if you pay the money back early.
Need funding fast while you wait for your R&D tax credit?
