R&D tax relief has been the subject of more legislative change in the past three years than in the entire previous decade. The merger of the SME and RDEC schemes, the introduction of Enhanced R&D Intensive Support (ERIS), tighter scope of qualifying expenditure, and the mandatory pre-notification regime all combine to produce a very different claim landscape in 2026. If you have not revisited your R&D strategy since 2023, you almost certainly have either a missed claim or an at-risk claim somewhere on your books.
The merged scheme
For accounting periods beginning on or after 1 April 2024, the previous SME and RDEC schemes are replaced by a single merged scheme. The mechanics:
- Relief is calculated as an "above-the-line" credit at 20% of qualifying R&D expenditure.
- The credit is taxable, so the post-tax benefit for a profitable company is approximately 15% (20% × 75% net of Corporation Tax at 25%).
- Loss-making companies can surrender the credit for a payable amount, at a notional tax rate of 19% — giving roughly 16.2% cash back.
- Subcontracted R&D is now generally claimed by the entity that decides to do the R&D, not the entity that performs it. This changes who benefits in many supply chains.
Enhanced R&D Intensive Support (ERIS)
Loss-making SMEs that are "R&D intensive" can claim under ERIS instead. The intensity test:
- Qualifying R&D expenditure must be at least 30% of total expenditure (reduced from 40% from accounting periods beginning on or after 1 April 2024).
- The SME must be loss-making.
Under ERIS, qualifying expenditure is enhanced by 86%, and losses can be surrendered for a payable credit at 14.5% — giving a cash benefit of roughly 27% of qualifying spend. That is materially more generous than the merged scheme, which is why proving ERIS eligibility is worth the effort if you are close to the threshold.
Pre-notification: the trap that catches first-time claimants
Possibly the most under-publicised change is the requirement to pre-notify HMRC of intent to claim R&D relief. The rules:
- Applies to companies that have not made an R&D claim in the previous three accounting periods.
- Notification must be submitted to HMRC within 6 months of the end of the accounting period in which R&D was undertaken.
- Failure to pre-notify means the claim cannot be made at all — there is no extension and no reasonable excuse defence.
We have seen multiple clients lose six-figure claims because their previous accountant did not notify within the window. If your year-end was 30 June 2025 and you did not pre-notify by 31 December 2025, that year's R&D claim is permanently lost.
Additional Information Form (AIF)
Every R&D claim must now be accompanied by an Additional Information Form submitted via the HMRC portal before or at the same time as the Corporation Tax return. The AIF requires:
- Detailed project narratives (technical advances sought, baseline science/technology, uncertainties).
- Qualifying expenditure broken down by category.
- Identification of the senior R&D contact and the agent (if used).
HMRC has explicitly stated that they will reject any claim filed without a complete AIF. The bar for narrative quality has risen sharply — generic "we developed a software platform" narratives no longer survive review.
What is — and is not — qualifying R&D
This is where most disputes arise. HMRC has tightened the published guidance and is actively challenging claims in areas like:
- Software development: building a website or a CRM is not R&D. Pushing forward the state of computer science (genuine algorithmic uncertainty) is.
- "Routine" engineering: applying known techniques in a new context generally fails the uncertainty test.
- Cosmetic improvements: better UX, faster page loads, neater code — not R&D unless they require a technological advance.
The litmus test remains: would a competent professional in the field consider the technological uncertainty readily resolvable? If yes, no claim.
HMRC compliance activity
HMRC's specialist R&D compliance unit grew significantly in 2024 and 2025. Enquiry rates on R&D claims now run at around 20%, vs single digits five years ago. The most common issues:
- Inflated qualifying expenditure (especially apportionment of director time).
- Subcontracted vs externally provided worker (EPW) misclassification.
- Connected-party costs without proper documentation.
- Claims for activities that are commercial development rather than scientific or technological advance.
How to position your 2026 claim defensively
- Pre-notify on time — diarise the 6-month deadline.
- Maintain a contemporaneous R&D log: technical decisions, dead ends, prototypes. Reconstruction after the fact is the single biggest red flag.
- Document subcontractor arrangements with written contracts that clearly identify who decided to do the work.
- Run an ERIS eligibility check if you are loss-making and tech-heavy.
- Engage specialists, not generalists. R&D is one of the few areas where the difference between a good and a poor adviser is reflected directly in the claim value.
PushDigits handles R&D claims as part of our tax planning service, working alongside your annual accounts preparation so the figures reconcile cleanly. To assess your current and historic claims for risk and opportunity, book a free 30-minute review, or message us via the contact page with your accounting year-end and we will tell you within 24 hours whether pre-notification is still possible.