Who Is Entitled to R&D Tax Credits?
Eligibility for research and development tax relief in the UK.
Not every company can claim research and development tax credits. Entitlement depends on company size, the type of R&D, and whether the work and costs meet HMRC’s definition. This page summarises who is entitled to R&D tax credits under the UK rules. It is for information only.
Companies that can claim
R&D tax relief is available to limited companies subject to UK Corporation Tax that carry out—or fund—qualifying R&D. Sole traders and partnerships do not claim R&D tax credits directly; their work may be reflected in a company that does. The company must be carrying on a trade and the R&D must relate to that trade. Subsidy and grant rules can affect which scheme (SME or RDEC) applies.
SME and large company definitions
SME status is defined by the Companies Act and EU-derived thresholds (staff headcount, turnover, balance sheet). If your company exceeds those limits, you may claim under RDEC instead of the SME scheme. Some SMEs that have received certain grants or subsidies also claim under RDEC. HMRC and official guidance set out the exact criteria for who is entitled to R&D tax credits under each scheme.
Exclusions and restrictions
Certain activities and costs are excluded from R&D tax relief. For example, R&D that is already subsidised by certain state aid may not qualify for the SME scheme. There are also anti-abuse rules and specific exclusions (e.g. some overseas expenditure). Checking HMRC guidance and, if needed, taking professional advice will confirm whether your company is entitled to R&D tax credits.