Key facts
- R&D tax relief has its own vocabulary — from RDEC to competent professional.
- The merged R&D scheme replaced the old SME and RDEC schemes from April 2024.
- Use Ctrl + F (or Cmd + F on Mac) to search for a specific term.
- Understanding these terms helps you prepare a stronger claim and respond to HMRC enquiries.
A – C
| Term | Definition |
|---|---|
| Advance in science or technology | The first of the three BIS Guidelines conditions. The project must seek to extend overall knowledge or capability in a field of science or technology — not merely be new to the company.[2] |
| AIF (Additional Information Form) | A mandatory form (from August 2023) that must be submitted to HMRC before or alongside an R&D tax relief claim. It provides details of the R&D projects, costs, and a named senior officer who endorses the claim.[1] |
| Baseline (technological) | The starting point of existing knowledge and capability in a field. R&D must seek an advance beyond this baseline. |
| BIS Guidelines | The UK guidelines that define qualifying R&D for tax purposes. Originally published by the Department for Business, Innovation & Skills; now maintained by the Department for Science, Innovation & Technology (DSIT).[2] |
| Competent professional | A person with the relevant qualifications, experience, and knowledge in the field of science or technology. The benchmark for determining whether genuine uncertainty exists.[3] |
| Consumable items | Materials, utilities (power, water, fuel), and other items consumed or transformed in the R&D process. Eligible as qualifying expenditure.[1] |
| CT600 | The Company Tax Return form. R&D tax relief is claimed on the CT600 using the relevant boxes and supplementary pages. |
D – L
| Term | Definition |
|---|---|
| DSIT | The Department for Science, Innovation & Technology — the government department responsible for the BIS Guidelines that define qualifying R&D. |
| EPW (Externally Provided Worker) | A worker provided by a staff agency or third party who works on the company’s R&D project. EPW costs are eligible for relief, but typically at 65% of the payment made to the staff provider.[1] |
| ERIS (Enhanced R&D Intensive Support) | A scheme for R&D-intensive SMEs (those spending 30%+ of total expenditure on qualifying R&D) that provides enhanced relief on top of the merged RDEC scheme. Loss-making ERIS-qualifying companies can receive a higher payable credit.[1] |
| Grant funding | Funding received from a grant body (e.g. Innovate UK). R&D expenditure met by notified state aid is treated differently and may affect the rate of relief available. |
| HMRC enquiry | A formal investigation by HMRC into an R&D tax relief claim. HMRC may request the technical report, project details, cost breakdowns, and supporting evidence.[3] |
M – R
| Term | Definition |
|---|---|
| Merged scheme | The unified R&D tax relief scheme that replaced the separate SME and large company (RDEC) schemes from April 2024. All companies now claim under the merged RDEC scheme at a 20% above-the-line credit rate.[1] |
| Qualifying expenditure | Costs that are eligible for R&D tax relief. Includes staff costs, EPWs, subcontractors (restricted), consumables, software, and certain clinical trial volunteer payments.[1] |
| Qualifying indirect activity (QIA) | Activities that support a qualifying R&D project but are not R&D in themselves — e.g. scientific planning, design, testing, data collection, and essential administration.[2] |
| R&D-intensive | A company whose qualifying R&D expenditure is at least 30% of its total expenditure. R&D-intensive SMEs may qualify for ERIS enhanced relief.[1] |
| RDEC (R&D Expenditure Credit) | An above-the-line tax credit for R&D spending. From April 2024, the merged scheme provides a 20% RDEC rate for all companies. The credit is taxable, giving a net benefit of approximately 15% for profitable companies.[1] |
S – Z
| Term | Definition |
|---|---|
| Scientific or technological uncertainty | The second BIS Guidelines condition. Uncertainty exists when a competent professional cannot readily determine whether the advance is achievable, how to achieve it, or what the outcome will be.[2] |
| SME (Small or Medium-sized Enterprise) | A company with fewer than 500 employees and either turnover under €100 million or gross assets under €86 million. SMEs may qualify for ERIS if R&D-intensive.[1] |
| Staff costs | The gross salary, employer NI, and employer pension contributions for employees directly engaged in qualifying R&D activities. Typically the largest component of an R&D claim.[1] |
| Subcontractor | A third party engaged to carry out R&D activities on the company’s behalf. Under the merged scheme, subcontractor costs are generally eligible at 65% of the amount paid (with some exceptions for connected parties and unconnected UK subcontractors).[1] |
| Systematic approach | The third BIS Guidelines condition. The R&D work must follow a structured, investigative method (hypothesis, testing, analysis) rather than relying on trial and error alone.[2] |
| Technical narrative / report | A written description of the R&D projects, the advances sought, the uncertainties faced, and the work undertaken to resolve them. Essential for supporting a claim and responding to HMRC enquiries.[3] |
| UK expenditure condition | From April 2024, subcontracted and EPW costs generally qualify only if the work is carried out in the UK, unless certain overseas conditions are met.[1] |
Tip: This glossary covers the most commonly encountered R&D tax credit terms. For the full legal definitions, refer to HMRC’s Corporate Intangibles R&D Manual (CIRD).
Frequently Asked Questions
What is the difference between RDEC and ERIS?
RDEC (R&D Expenditure Credit) is the above-the-line credit available to all companies under the merged scheme from April 2024, at a rate of 20%. ERIS (Enhanced R&D Intensive Support) is an enhanced scheme for R&D-intensive SMEs (where qualifying R&D expenditure is 30%+ of total expenditure), offering additional relief on top of the standard merged scheme.
What are the BIS Guidelines?
The BIS Guidelines (originally published by the Department for Business, Innovation & Skills, now maintained by the Department for Science, Innovation & Technology) define what qualifies as R&D for tax purposes in the UK. They set out the three conditions: an advance in science or technology, scientific or technological uncertainty, and a systematic approach to resolving that uncertainty.
What does “competent professional” mean?
A competent professional is a person with the relevant qualifications, experience, and knowledge in the field of science or technology being investigated. They are the benchmark for assessing whether genuine scientific or technological uncertainty existed. If a competent professional could have readily solved the problem, it does not qualify as R&D.
What is a qualifying indirect activity?
A qualifying indirect activity (QIA) is work that supports a qualifying R&D project but is not R&D itself. Examples include scientific planning, design and testing related to the R&D, mathematical analysis, data collection, and essential clerical work. QIAs are eligible for R&D tax relief when carried out as part of a qualifying project.
Further Reading
- What Qualifies as R&D? — the BIS Guidelines test explained
- The Merged RDEC Scheme — how the unified credit works
- The ERIS Scheme — enhanced relief for R&D-intensive SMEs
- Eligible R&D Costs — staff, subcontractors, EPWs, and consumables
- The R&D Technical Report — documenting your claim
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