If you’re building software, the chances are good that some of what your team does every week counts as R&D in HMRC’s eyes, and a meaningful chunk of your development spend could come back as a corporation tax credit or cash payment.

The problem is that R&D tax relief has changed substantially over the last two years, and a lot of the guidance still circulating online refers to a scheme that no longer exists. For SaaS founders in Exeter, Bristol and London weighing up whether it’s worth the effort, here’s what actually qualifies under the current rules, what a claim needs to look like to survive HMRC scrutiny, and most urgentl, a deadline that quietly disqualifies otherwise strong claims every year.

Here’s what actually qualifies under the current rules and what a claim needs to look like to survive HMRC scrutiny.

For accounting periods starting on or after 1 April 2024, the old split between the SME scheme and RDEC (Research and Development Expenditure Credit) no longer exists. Almost all companies now claim under a single merged R&D scheme, with one exception for loss-making, R&D-intensive SMEs.

The merged scheme:

• A 20% above-the-line credit applied to qualifying R&D expenditure
• The credit is taxable income, so your actual cash benefit depends on your corporation tax rate — broadly 15p
• in the pound at the 25% main rate, rising to around 16.2p at the 19% small profits rate
• Applies to the vast majority of SaaS and tech businesses, profitable or not

Enhanced R&D Intensive Support (ERIS):

• For loss-making SMEs where qualifying R&D spend is at least 30% of total costs
• Offers a considerably more generous cash benefit — a payable credit rather than something offset against a tax bill you may not yet owe
• Genuinely valuable for early-stage, pre-revenue or heavily product-led SaaS businesses where most of the cost base is engineering

What that looks like in practice: a SaaS company with £400,000 in qualifying R&D spend under the standard merged scheme, at the 25% corporation tax rate, would see a cash benefit of roughly £60,000. The same £400,000 of spend for a loss-making, R&D-intensive company claiming under ERIS could return closer to £90,000–£100,000 — nearly double, for identical underlying costs.

That gap is why the intensity threshold matters more than most founders realise. A company sitting at 28% R&D intensity gets the standard 20% merged rate. Push that to 31% (sometimes just a matter of how costs are categorised), and you’re in ERIS territory with a materially better outcome. This is exactly the kind of detail that’s easy to miss without someone reviewing your cost structure specifically for it.

This is where most confusion and most HMRC enquiries originate. R&D tax relief was never designed to reward “we built some software.” It rewards work that resolved genuine scientific or technological uncertainty: problems where a competent professional in your field couldn’t readily work out the answer in advance.

The test isn’t how hard the work was, or how skilled the team is — it’s whether the answer was genuinely uncertain in advance. This is the single biggest source of over-claiming we see, and it’s exactly where HMRC’s increased compliance scrutiny is focused.

Save this table. It’s a useful gut-check to hold against your own sprint backlog before you start building a claim.

1. Overseas contractor and subcontractor costs generally don’t qualify.

If your development team is partly overseas, expenditure on work carried out outside the UK is now excluded from most claims, with narrow exceptions. This is a recent change that catches out founders who’ve built distributed teams for cost or talent reasons — a very common pattern for scaling SaaS businesses.

2. Grant funding changes which scheme you claim under.

If any part of your R&D has been grant-funded, that expenditure typically has to be claimed under the merged scheme rather than ERIS, even if you’d otherwise qualify for the more generous rate. Founders who’ve taken Innovate UK or regional grant funding sometimes assume it stacks cleanly with R&D relief — the mechanics are more nuanced than that.

3. The claim notification deadline is easy to miss.

For many companies, particularly first-time claimants, or anyone who hasn’t claimed in the last three years, you now need to notify HMRC of your intention to claim within six months of the end of the accounting period. Miss that window and you may lose the ability to claim at all, regardless of how strong the underlying work is. This is the single most common reason we see a genuinely qualifying claim disappear entirely, not weak eligibility, a missed calendar date.

4. The Additional Information Form isn’t optional.

Every claim must be submitted with a detailed Additional Information Form setting out the qualifying projects and costs. A generic or thin submission is one of the fastest routes to an HMRC enquiry; the form is where claims are won or lost on quality of evidence, not just eligibility.

5. Not separating qualifying and non-qualifying work within a single project.

Real SaaS development rarely falls neatly into “all R&D” or “no R&D.” A single sprint might include genuinely novel architecture work alongside routine feature building. The strongest, most defensible claims break costs down at this level rather than claiming a whole project wholesale, and it usually increases the claim value rather than reducing it, because it’s backed by evidence HMRC can follow.

HMRC’s own figures show why “just submit it and see” is no longer a viable strategy. Compliance checks now cover a materially larger share of claims than they did two years ago, and the majority of claims selected for review end up needing some form of adjustment, evidence that thin or generic submissions rarely survive scrutiny unchanged. Enquiries are common enough that getting the technical narrative and cost categorisation right the first time now matters as much as identifying that qualifying work exists in the first place.

For SaaS and FinTech founders across Exeter, Bristol and London, that shifts where the real value of doing this properly sits: not in finding R&D spend, but in evidencing it well enough to hold up if HMRC asks questions.

R&D tax credits remain one of the most valuable reliefs available to genuinely innovative SaaS and FinTech businesses, but the gap between a well-evidenced claim and a generic one has widened considerably under the current rules. Getting your qualifying costs, intensity ratio and supporting documentation right isn’t just about maximising the claim — it’s about making sure it holds up if HMRC asks questions.

A credit that lands successfully is also non-dilutive cash at exactly the point many SaaS businesses need it most. If you’re currently building your runway and financial planning around a fundraise, or preparing for Series A readiness, an R&D credit landing on schedule can meaningfully change that picture.

If you’re not sure whether your development work would qualify, or want a second opinion on a claim you’re preparing, we’d be glad to talk it through.

This article is intended as general guidance and doesn’t constitute tax advice specific to your circumstances. R&D tax relief rules are complex and claim eligibility depends on your company’s specific facts — speak to an advisor before submitting a claim.

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