Navigating the complexities of R&D tax credits can feel overwhelming. Whether you’re a small business owner or part of a larger corporation, understanding the rules and restrictions is key to making sure your claim is accurate and increases your potential benefits.
In this article
Is there a minimum expenditure threshold to claim?
Good news, there’s no minimum spend required to claim R&D tax relief. Since 2012, HMRC scrapped the previous expenditure requirement, meaning businesses of all sizes can claim R&D tax relief, no matter how big or small the project. This change opened the door for startups, scaleups, and SMEs to access valuable funding for innovation. Whether you’re developing your first prototype or refining a process, you could be eligible for a tax boost to fuel your next breakthrough.
What are the key restrictions for R&D tax credits
Specific restrictions apply to ensure that only genuine innovation activities are rewarded. These rules define which activities, costs, and projects qualify under HMRC guidelines. Businesses also need to watch out for complications with subcontractor use, EPWs, PAYE/NIC caps, and accounting periods.
Knowing these boundaries helps you stay compliant and spot hidden opportunities in your R&D projects.
Expenses excluded from R&D tax relief
Some costs are automatically excluded from R&D tax claims, including:
Project commercialisation costs
Advertising, promotions, packaging and market launches are not eligible
Capital expenditure
Machinery and equipment costs are eligible unless directly consumed in the R&D process.
Production and distribution
General manufacturing, shipping and packaging costs, unless used solely for R&D testing, are excluded.
Staff training
Training is only claimable if it directly supports qualifying R&D activities.
Land, property, and IP costs
Expenditure on land, building, patents, and trademarks falls outside R&D tax relief.
Entertainment & hospitality
Meals, events, and client entertainment are categorised as business expenses and cannot be included.
Choosing Ayming as your partner
Navigating HMRC’s rules on R&D tax relief can be complex, with restrictions on eligible costs, subcontractors, and accounting periods. Our specialists ensure your claim is fully optimised, compliant, and hassle-free, helping you unlock funding whether you’re a scaling business or established firm. With years of experience and a proven track record, we take the uncertainty out of the process, so you can focus on what matters most- innovating and growing your business.
What Counts As Qualifying Expenditure