For accounting periods beginning on or after 1 April 2024 there are two. The merged scheme gives an above the line expenditure credit at 20 per cent of qualifying spend to companies of any size. Because the credit is itself taxable, the net benefit is around 15 per cent at the main rate of corporation tax and 16.2 per cent at 19 per cent. Enhanced R&D intensive support, known as ERIS, is available instead to loss making small and medium sized companies where qualifying R&D spend is at least 30 per cent of total relevant expenditure, and is worth up to around 27 pence in the pound. You cannot claim both on the same expenditure, so establishing which route applies is the first thing to work out.

It compares relevant R&D expenditure against total relevant expenditure for the accounting period. Where the company has connected or associated companies, their expenditure comes into the calculation too, which catches out groups that assume the test is applied company by company. The company must also be loss making before any R&D enhancement is applied. There is a one year grace period for companies that qualified in the previous period and fall just below the threshold.

The work has to seek an advance in science or technology by resolving a scientific or technological uncertainty that a competent professional in the field could not readily deduce. Commercial novelty is not the test. Building something that is new to your business, or difficult, or expensive, does not qualify on its own if the underlying technical problem was already solved and documented somewhere in the field.

Staff costs for people directly engaged in the R&D, including salary, employer National Insurance and pension contributions, apportioned for the time actually spent. Also software, consumables, data and cloud computing costs, payments to clinical trial volunteers, externally provided workers, and qualifying subcontracted work. Two restrictions matter in practice. Externally provided worker and subcontractor costs are generally not claimable where the work is carried out overseas, and under the merged scheme it is usually the company that decided to do the R&D, rather than the subcontractor carrying it out, that holds the claim.

Often yes. A claim notification form must be submitted within six months of the end of the period of account unless you have made a valid R&D claim in one of the previous three years. So a December year end means a 30 June deadline. Miss it and the claim is invalid for that period, with no discretion to accept it late. This has caught out a number of companies that had a gap in their claim history and assumed they still counted as existing claimants.

Every claim has needed one since August 2023, submitted before or at the same time as the company tax return. It requires project descriptions covering the technological baseline, the uncertainties and how they were addressed, along with a cost breakdown, the agent's details and a named senior officer of the company who takes responsibility for the claim. Claims submitted without it are removed from the return rather than queried.

Higher than it used to be. HMRC has substantially increased compliance activity in this area and claim volumes have fallen sharply as a result. The practical protection is contemporaneous record keeping, project narratives written by the people who did the work rather than reverse engineered afterwards, and cost allocations you can actually evidence. It is also worth remembering that the named officer on the additional information form carries personal responsibility for the claim.

Yes, and most early stage companies eventually do. SEIS comes first, because a company cannot receive SEIS money after it has already issued EIS shares. The lifetime SEIS limit is £250,000, so where a round is larger than that the usual approach is to take £250,000 under SEIS and the balance under EIS, issuing the SEIS shares first and the EIS shares on a later date. Getting the order or the dates wrong is one of the more common reasons a claim fails, and it is not something HMRC will overlook because the intention was right.

HMRC currently turns most applications around in about two to three weeks, though it can run longer at busy points in the year and a poorly prepared application will attract questions that add to that. Applications need to name at least one prospective investor who has actually agreed to invest, as HMRC will not consider a speculative application.

No. Advance assurance confirms HMRC's view on the information you have given it at that point. If the facts change, or if the information was incomplete, the assurance does not bind HMRC. Relief is only secured when the shares are issued, the money is spent on a qualifying trade, and the compliance statement is submitted and accepted.

Under SEIS a company can raise £250,000 in total, must have gross assets under £350,000 and fewer than 25 full time equivalent employees, and must have been carrying on its new qualifying trade for less than three years. Under EIS the limits rose substantially from 6 April 2026. A company can now raise £10 million in any rolling twelve month period and £24 million over its lifetime, doubling to £20 million and £40 million for knowledge intensive companies. Gross assets must not exceed £30 million immediately before the share issue or £35 million immediately after, and the company must have fewer than 250 full time equivalent employees, or 500 if knowledge intensive. The increases do not apply to certain specified companies, including those registered in Northern Ireland, which remain on the previous limits.

Under SEIS, income tax relief at 50 per cent on up to £200,000 invested in a tax year, capital gains tax exemption on a qualifying disposal after three years, and reinvestment relief on up to £100,000 of gains. Under EIS, income tax relief at 30 per cent on up to £1 million a year, or £2 million where the excess is in knowledge intensive companies, with capital gains deferral and an exemption on disposal after three years. Relief under both schemes can be carried back to the previous tax year. Loss relief is available if the investment fails.

SEIS is only available where the company has been carrying on its new qualifying trade for less than three years at the date the shares are issued. Where a trade has been carried on previously by someone else and then transferred in, HMRC will look at when that trade actually started rather than when your company took it over. Companies incorporated some time before trading began need to be careful about which date they put on the application, and about how they describe any earlier activity.

Under SEIS a paid director can qualify. Under EIS a director cannot normally qualify unless they were unconnected with the company when the shares were issued and only became a director afterwards, which is the business angel exception. Separately, no investor under either scheme can hold more than 30 per cent of the company's shares or voting rights, counting the holdings of associates as well as their own.

The investor loses their income tax relief and it is clawed back. The three year clock runs from the date the shares were issued, or from the date trading began if that is later, not from when the company was formed. This matters for exit timing, and it is worth checking before signing heads of terms rather than after.

From 6 April 2026 the company or group must have gross assets not exceeding £120 million and fewer than 500 full time equivalent employees, and must be carrying on a qualifying trade. The previous thresholds were £30 million and 250 employees, so a number of companies that had outgrown EMI now qualify again. Certain activities are excluded, including property development, financial services, and legal and accountancy services. Where a company has a mix of activities, the test is whether the excluded activities amount to a substantial part of the business, which HMRC takes as more than 20 per cent.

An individual can hold unexercised EMI options over shares worth up to £250,000 measured at the date of grant, and that limit has not changed. The company wide limit doubled to £6 million of unexercised options across all participants from 6 April 2026. Once an individual reaches £250,000 they cannot be granted further EMI options for three years, even if the earlier options have been exercised in the meantime.

It is not compulsory but almost every company does it. Agreeing the unrestricted and actual market values with HMRC in advance using form VAL231 removes the risk of a dispute later about whether the exercise price was set correctly, and gives you a figure you can rely on when the options are exercised. An agreed valuation is normally valid for 90 days.

For options granted on or after 6 April 2024 the grant is notified to HMRC by 6 July following the end of the tax year in which it was made, rather than within 92 days as was previously the case. Older scheme rules and option agreements often still specify 92 days, and where they do the contractual deadline continues to bite even though the statutory one has moved, so it is worth checking your documents. From 6 April 2027 the separate notification requirement is being removed altogether and grants will simply be reported through the annual return. That annual return is due by 6 July for every registered scheme and must be filed even where nothing happened during the year.

Options granted on or after 6 April 2026 must be capable of exercise within fifteen years, extended from ten. Existing unexercised options can generally be amended to take advantage of the longer window without losing their tax advantaged status, but amending an option agreement can amount to a cancellation and regrant if handled badly, so it should not be done without advice. Most schemes are written so that options only become exercisable on an exit, which keeps the tax position simple and avoids employees holding shares in a private company with no market for them.

Where the exercise price was set at or above the actual market value agreed at grant, there is no income tax or National Insurance on exercise. The employee pays capital gains tax on the eventual sale. Where the option was granted at least two years before the shares are sold, business asset disposal relief may apply, which is charged at 18 per cent from 6 April 2026, up from 14 per cent in the previous tax year. The company can also claim a corporation tax deduction for the gain the employee makes on exercise.