Innovation relief
98% of UK tech businesses use the R&D tax credit scheme
The government’s incentive for advancing science and technology has seen broad engagement, with widespread take up of the R&D tax credit scheme.
HMRC has been working to tackle persistent fraud and errors in the scheme in recent years. This led to concerns legitimate claims were being delayed. In particular, claims from software companies were scrutinised after high levels of fraud were identified. Changes to eligibility criteria and administrative requirements also led to confusion over the scheme. However, broad-based engagement from survey respondents, with 98% making a claim in the last year, suggests the incentives are working to drive innovation despite these concerns.
How R&D claims were dealt with in the last 12 months
Over 98% made an R&D claim during the past 12 months
Some improvements have been made, but challenges persist
UK tech companies in 2025 are not seeing the damaging delays and challenges to their R&D claims of 2024. 54% submitted a claim that was approved without challenge this year.
The number of claims challenged by HMRC and then declined dropped from 37% to 27%, and claims that were initially approved but later challenged requiring a repayment also dropped (from 35% to 32%).
This shows UK tech companies have adapted well to the enhanced rigour and review enforced by HMRC in recent years, getting to grips with the requirements of the scheme and filing robust claims.
of claims were approved without challenge this year, up from 27% last year
Our view
We believe further improvements could be made to the scheme if the government is serious about the UK being a global player in the tech space. We hope the government does not target the scheme as it tries to address the significant gap in its finances.
For businesses engaging with the scheme, we have some tips for making successful claims and avoiding common pitfalls.
Engage experienced and knowledgeable advisers Working with a specialist adviser can ensure you understand the extent of your qualifying R&D and that your tax relief claim is properly evidenced, robust and defensible.
Upskill and involve your workforce Your finance and technical teams will be required to contribute to the claim. Making sure they understand the scheme and can provide the correct information is a worthwhile investment.
Start early R&D claims can be a lengthy undertaking and missed deadlines can mean missing out on vital relief, so give yourself adequate time to put together a solid claim.
