Glossary

R&D Tax Relief Glossary

70 defined terms across UK research and development tax relief, the merged scheme, Enhanced R&D Intensive Support, capital allowances and land remediation relief. Each entry gives a definition, the relevant HMRC CIRD reference and a practical example.

Quick answer: This glossary defines 70 terms used in UK R&D tax relief, covering the merged scheme, Enhanced R&D Intensive Support (ERIS), capital allowances, and land remediation relief. Each entry includes the HMRC CIRD manual reference and a practical example — useful for finance directors, accountants, and technical staff preparing or reviewing a claim.

A

  • Above-the-Line Credit An above-the-line credit is an R&D tax credit treated as taxable income in the company's profit and loss account rather than as a reduction in its corporation tax liability.
  • Accountant R&D Handoff Accountant R&D handoff is the co-ordination process between a company's accountant and a specialist R&D adviser, covering data transfer, CT600 timing and shared compliance responsibility.
  • Additional Information Form (AIF) The Additional Information Form is a mandatory HMRC submission that must accompany every UK R&D tax relief claim for accounting periods with claims filed on or after 8 August 2023.
  • Advance Assurance Advance Assurance is a voluntary HMRC service giving qualifying first-time small company R&D claimants written confirmation that their activities qualify for relief for the next three accounting periods.
  • Agent Registration (HMRC) Agent registration is the process by which a tax adviser obtains an agent reference number from HMRC in order to act on behalf of a company for R&D tax relief submissions.
  • Apportionment Apportionment is the method of allocating a cost that is partly qualifying and partly non-qualifying, or a period that straddles a rule change, between the relevant categories on a just and reasonable basis.
  • Accounting Period vs Period of Account The accounting period and period of account differ in UK tax law. CNF deadlines run from the period-of-account end, not the accounting period end.
  • Agent Services Account The Agent Services Account is the HMRC portal advisers must use to act for R&D clients. From 18 May 2026, mandatory R&D agent registration is also required.
  • Amendment Notice An amendment notice is how HMRC closes a compliance check by reducing or disallowing an R&D tax relief claim. The company may appeal within 30 days of receipt.

B

  • BIS Guidelines The BIS Guidelines are the Department for Business, Innovation and Skills rules that define what counts as research and development for UK tax purposes.
  • Baseline of Knowledge The baseline of knowledge is the publicly available science and technology against which an R&D project's uncertainty is measured for HMRC tax relief purposes.

C

  • Capital Allowances Capital allowances are a UK tax relief giving businesses a deduction against taxable profits for qualifying plant, machinery and integral features in commercial property.
  • Capital Expenditure (R&D) Capital expenditure for R&D purposes is spend on assets used in qualifying research and development that attracts a 100% first-year allowance under the Research and Development Allowances regime.
  • CIRD Manual The CIRD Manual is HMRC's internal guidance on Corporate Intangibles Research and Development, covering the rules, definitions and procedures for R&D tax reliefs and intangibles relief.
  • Claim Notification Form The Claim Notification Form is a mandatory pre-claim notification that certain first-time or infrequent R&D claimants must submit to HMRC within six months of the end of the accounting period.
  • Competent Professional A competent professional is an appropriately qualified or experienced expert in the relevant field of science or technology whose judgement determines whether a project faces genuine R&D uncertainty.
  • Competitor Comparison (R&D Providers) Competitor comparison of R&D providers is the assessment of the specialist firms a company can engage to prepare its claim, considering fee model, compliance record, technical breadth and client support.
  • Consumables (R&D) Consumables are materials, fuel, water and power physically used up or transformed in the course of a qualifying R&D project, and are a qualifying expenditure category.
  • Corporation Tax Self Assessment Corporation Tax Self Assessment is the UK framework under which companies calculate, declare and pay their own corporation tax, and within which R&D tax relief claims are made.
  • Cosmetic Uncertainty Cosmetic uncertainty is an informal HMRC term for apparent uncertainty that is resolved by routine application of existing knowledge rather than by genuine scientific or technological investigation.
  • Competent Witness A competent witness gives technical evidence at tribunal on R&D uncertainty. Distinct from the competent professional standard used during the R&D work itself.
  • Compliance Check A compliance check is the formal HMRC enquiry mode for R&D tax relief, opened under s9A TMA 1970, requiring the company to provide supporting information.
  • Contracted-Out R&D Contracted-out R&D is where one party commissions work performed by another. From April 2024, the funder claims the merged scheme relief, not the performer.

D

  • Data and Cloud Costs (R&D) Data and cloud costs became qualifying R&D expenditure for accounting periods beginning on or after 1 April 2023, covering licensing of datasets and cloud computing services used in qualifying projects.
  • De Minimis Aid De minimis aid is government support below the state aid notification threshold, relevant to legacy SME R&D claims for accounting periods before 1 April 2024.

E

  • Eligible R&D Activity Eligible R&D activity is work that forms part of a project seeking an advance in science or technology through the resolution of scientific or technological uncertainty, as defined by the BIS Guidelines.
  • Enhanced R&D Intensive Support (ERIS) Enhanced R&D Intensive Support is a higher-rate R&D tax relief for loss-making UK SMEs whose qualifying R&D expenditure represents at least 30% of total expenditure in the accounting period.
  • Enquiry (HMRC) An HMRC enquiry is a formal investigation into a submitted corporation tax return, during which HMRC requests evidence and may amend or reject the R&D tax relief claim.
  • Exempt Foreign Permanent Establishment An exempt foreign permanent establishment is an overseas branch of a UK company whose profits have been elected out of UK corporation tax, with implications for which R&D expenditure qualifies for UK relief.
  • Externally Provided Workers (EPWs) Externally provided workers are agency or staff-provider personnel whose labour cost can be claimed as qualifying R&D expenditure at 65% of the amount paid to the provider, subject to specific contractual conditions.
  • Enhanced Deduction The enhanced deduction was the old SME mechanism allowing 230% deduction of qualifying R&D spend from profits, replaced by the merged scheme from April 2024.

F

  • Fraction of Time Fraction of time is the proportion of an employee's working time spent directly on qualifying R&D activity, used to apportion their staff cost into the qualifying R&D expenditure calculation.

G

  • Grant Funding (R&D Claim) Grant funding is government or public-body financial support whose receipt can restrict or eliminate the enhanced SME scheme treatment of associated R&D expenditure, with different rules under the merged scheme.

H

  • HMRC Disclosure HMRC disclosure is the body of information that must be submitted with an R&D claim, including the Additional Information Form, agent details, senior contact and supporting narrative.

I

  • Innovate UK Grant Interaction Innovate UK grant interaction describes how the receipt of an Innovate UK grant, typically classed as notified state aid, affects the R&D tax relief a company can claim on the related project expenditure.

L

  • Land Remediation Relief Land Remediation Relief is a UK corporation tax relief giving qualifying companies a 150% deduction on the cost of cleaning up contamination or dereliction on acquired land.
  • Loss-Making R&D Claim A loss-making R&D claim is an R&D tax relief claim from a company with a tax loss, which can surrender the relief for a cash payment from HMRC subject to rate and cap rules.

M

  • Merged R&D Scheme The merged R&D scheme is the single UK research and development tax relief that replaced the separate SME and RDEC schemes for accounting periods beginning on or after 1 April 2024.

N

  • Notified State Aid Notified state aid is government financial support that has been formally notified to and approved by the European Commission or, post-Brexit, the UK subsidy control regime.
  • Notional Tax (RDEC) Notional tax is the deemed tax deduction applied to an RDEC or merged-scheme credit to convert the above-the-line credit into its post-tax payable amount.
  • Nudge Letter A nudge letter is an HMRC communication sent to companies identified as potentially overclaiming R&D relief, asking for a claim review before formal enquiry.

P

  • PAYE Cap The PAYE cap limits the payable R&D tax credit a loss-making company can surrender to HMRC to £20,000 plus three times the company's PAYE and NIC liability for the period.
  • Pre-Trading R&D Expenditure Pre-trading R&D expenditure is qualifying research and development spend incurred before a company begins to trade, which can still be included in an R&D tax relief claim when trading commences.
  • Payable Credit A payable credit is cash from HMRC for loss-making companies that cannot offset R&D relief against tax, available under the merged scheme and ERIS.

Q

  • Qualifying Body A qualifying body is a university, charity, health service body or other listed organisation whose payments from a company for R&D work can be treated as qualifying subcontractor expenditure.
  • Qualifying Expenditure Qualifying expenditure is the statutory set of cost categories that can be included in an R&D tax relief claim, including staff, subcontractors, externally provided workers, consumables, software, and data and cloud costs.
  • Qualifying Indirect Activities (QIA) Qualifying indirect activities are supporting tasks that do not themselves resolve scientific or technological uncertainty but are undertaken for the purposes of an R&D project and therefore form part of the claim.

R

  • R&D Intensity R&D intensity is the ratio of qualifying R&D expenditure to total expenditure in an accounting period, used to determine eligibility for Enhanced R&D Intensive Support.
  • RDEC (Research and Development Expenditure Credit) RDEC is the UK large-company R&D tax relief delivered as an above-the-line taxable credit, which applied to large companies until 31 March 2024 and now forms the basis of the merged scheme.
  • Routine Improvement Routine improvement is work that adapts, extends or enhances an existing product or process using established techniques, and is excluded from the UK tax definition of research and development.

S

  • Scientific or Technological Advance A scientific or technological advance is an appreciable improvement in the overall knowledge or capability of a field of science or technology, and is the positive objective that a qualifying R&D project must seek.
  • Scientific or Technological Uncertainty Scientific or technological uncertainty exists where the solution to a technical problem is not readily deducible by a competent professional and requires investigation or experimentation to resolve.
  • Small or Medium-Sized Enterprise (SME, R&D) An SME for R&D tax relief purposes is a company with fewer than 500 staff and either turnover under €100m or a balance sheet under €86m, aggregated with connected and partner enterprises.
  • Software (R&D Claim) Software R&D refers to research and development activity in software development, which qualifies where it seeks an advance in computer science or software engineering, not merely novel business functionality.
  • Staff Costs (R&D) Staff costs for R&D claim purposes are the gross salaries, employer National Insurance, employer pension contributions and certain reimbursed expenses of employees directly engaged in qualifying R&D, apportioned by time.
  • Straddling Period A straddling period is an accounting period that spans a legislative change date, such as 1 April 2024, and requires the claim to be split between the rules applying before and after that date.
  • Subcontractor R&D (UK Rule) The UK subcontractor rule under the merged scheme limits qualifying subcontractor expenditure to work performed in the UK, with narrow exceptions where UK performance is not feasible for non-cost reasons.
  • Subsidised Expenditure Subsidised expenditure is R&D expenditure funded directly or indirectly by grants or third-party contributions, which reduces the qualifying amount under specific statutory rules.
  • Surrenderable Loss A surrenderable loss is the portion of a loss-making company's tax loss, attributable to R&D relief, that can be exchanged with HMRC for a payable tax credit rather than carried forward.
  • Systematic Investigation Systematic investigation is the structured approach of designing, recording and evaluating experiments or analyses, which HMRC expects to see evidenced when a company claims to have resolved scientific or technological uncertainty.

T

  • Tax Credit Payment A tax credit payment is the cash amount HMRC pays a loss-making company that has surrendered its R&D relief for a payable credit, usually issued by bank transfer within six to eight weeks of claim processing.
  • Technology Readiness Level (TRL) Technology Readiness Level is a nine-point scale, originating from NASA, used informally to describe the maturity of a technology and sometimes referenced in R&D tax claim narratives.
  • Time Apportionment Time apportionment is the method of allocating staff costs, and sometimes overheads, to a qualifying R&D project on the basis of the proportion of time spent on qualifying activity.
  • Tribunal (R&D Cases) Tribunal R&D cases are decisions of the First-tier Tribunal or Upper Tribunal on disputed R&D tax relief claims, which shape HMRC practice and the interpretation of the BIS Guidelines.
  • Two-Year Claim Window The two-year claim window is the statutory deadline for submitting or amending an R&D tax relief claim, measured as two years from the end of the relevant accounting period.
  • Tribunal Jurisprudence: R&D Tax Relief Cases An overview of First-tier Tribunal cases shaping HMRC's interpretation of scientific uncertainty, competent professionals and qualifying R&D expenditure.

U

  • UK Corporation Tax UK corporation tax is the tax on the taxable profits of UK-resident companies and UK branches of foreign companies, currently charged at a main rate of 25% with a 19% small profits rate for profits up to £50,000.
  • Uplift Rate Uplift rate is the former percentage additional deduction granted under the SME R&D scheme, providing 130% enhancement on qualifying R&D expenditure before its reduction to 86% and subsequent replacement by the merged scheme.

V

  • Validation (R&D) Validation is the process of checking that an R&D claim's activities, competent professional identification, expenditure categorisation and documentation meet the statutory and HMRC guidance requirements before submission.
  • Vouching Vouching is the process of tracing individual claim figures back to underlying accounting records, timesheets, invoices and contracts to confirm that the reported qualifying expenditure is accurate and supportable.

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Glossary explained

Frequently asked questions

R&D intensity is the proportion of a company’s total expenditure that qualifies as R&D for tax credit purposes. Under the SME scheme rules that applied before April 2024, loss-making companies with R&D intensity of 40% or more were classified as R&D intensive and could claim an enhanced 14.5% payable credit rate.

A Competent Professional (CP) is a person with sufficient knowledge, skill, and experience in the relevant scientific or technological field to judge whether a project is genuinely seeking to advance science or technology and resolving a genuine uncertainty. HMRC expects claimants to be able to identify who acted as the Competent Professional on each R&D project.

Technological uncertainty means that a competent professional in the relevant field could not readily deduce the outcome of the R&D work at the outset. It is a core qualifying criterion under HMRC guidelines: routine or standard development work with a predictable outcome does not qualify.