How to Help Your Customers Get Important Research and Development Reliefs

When small businesses in the UK are starting and scaling, external support is essential. But not all financing means giving away ownership of the company or agreeing to impossible repayment terms.

As a broker to small businesses, you must be able to showcase a wide range of options to your clients and help them find one that best fits their unique requirements. One of these solutions could be claiming research and development reliefs.

Research and Development (R&D) tax reliefs are one of the most underutilised opportunities for SMEs in the UK. Despite the government’s ongoing support for innovation, many small and medium-sized businesses either don’t know they qualify or don’t know how to claim. 

In this guide, we’ll cover everything you need to know about helping your customers access R&D reliefs: what they are, who qualifies, how to claim and how you, as a broker, can support the entire process.

What Are Research and Development Reliefs?

R&D (Research and Development) tax relief is a government incentive to encourage innovation. It rewards companies that spend money improving products, processes, services, or systems (even if the project fails).

For accounting periods starting before 1 April 2024, SMEs could:

• Deduct 186% of their qualifying R&D costs when calculating Corporation Tax
• Get a cash credit of up to 14.5% of the loss if they were loss-making

Since April 2024, the rules have changed. The government merged the old SME and large company schemes into one, more streamlined system.

The 2024 changes mean:

1. There’s now one scheme for everyone

Most businesses (including SMEs) now fall under the merged R&D Expenditure Credit (RDEC) scheme. Instead of deducting R&D costs from profits, companies get a taxable credit worth 20% of their eligible R&D spend.

In real terms, this means a net benefit of around 16.2% once tax is applied.

2. R&D-intensive SMEs get something extra

If your client is loss-making and spends at least 30% of total costs on R&D, they may qualify for a special top-up scheme called Enhanced R&D Intensive Support (ERIS).

That means they don’t just get the 20% credit; they can instead access the more generous, SME-style relief (like before 2024), even getting up to £27 back for every £100 spent on R&D.

3. They must tell HMRC in advance

This is critical. From April 2024, if a company wants to make an R&D claim for the first time (or hasn’t claimed in the past 3 years), they must notify HMRC within 6 months of the end of their accounting period.

Miss that window, and they can’t claim.

Who Qualifies for R&D Relief?

For accounting periods beginning before 1 April 2024, SMEs needed to meet the following criteriaTo qualify for R&D tax relief for SMEs, your client must have: 

1. less than 500 staff 
2. a turnover of under 100 million or a balance sheet total under 86 million 
3. an accounting period beginning before 1 April 2024 

You must include the staff, turnover and balance sheets of any linked or partner companies in the total when you work out if you can claim R&D tax relief for SMEs.

Your client must also be able to prove that they:

• Try to solve a technical or scientific problem 
• Face technical uncertainty where a professional couldn’t easily find the answer
• Take a structured approach to figuring it out, e.g., trial and error, prototyping, testing

Common examples of qualifying R&D:

• A manufacturer creates a new material or customises machinery for better performance
• A food company experiments with non-dairy alternatives that don’t affect the texture
• A software developer builds an internal tool with complex integrations
• An engineering firm redesigns a product to meet new safety regulations

How Much Can Companies Claim?

• Accounting Periods Starting Before 1 April 2024
  • Enhanced deduction: 186% total deduction.
  • Loss-making SMEs can surrender losses for a payable credit worth up to 14.5% of the surrenderable loss if they meet the intensity condition.
• Accounting Periods On or After 1 April 2024
  • Merged scheme: multiplier of 20%, delivering a net benefit of ~16.2%.
  • ERIS (if loss-making and R&D‑intensive): SME‑style enhanced deduction (e.g. up to 186%) applies, just like before.

There is also a cap on payable credits (capped at £20,000 plus 300% of total PAYE/NICs liability since April 2021), although intensive SMEs may be exempt

How You Can Help Small Businesses as a Broker

Small businesses often rely on their brokers to help them finance their business, so here’s how you can help them if R&D reliefs are an option:

Spotting the Opportunity

As a broker, you speak to business owners regularly about growth, challenges, and investment. Often, they’ll mention things that sound routine to them, like developing a new product in-house, building their own system because nothing on the market quite fits, or spending months trying to solve a technical issue. These kinds of comments are worth digging into. They often signal potential qualifying R&D activity, even if the business owner doesn’t see it that way.

Understanding the Timelines

Under the new rules introduced in April 2024, timing has become even more important. If your client wants to claim R&D tax relief and they’re either claiming for the first time or haven’t claimed in the past three years, they need to pre-notify HMRC within six months of the end of their accounting period.

This is a hard deadline. Missing it means they simply can’t claim for that period. It’s a point that’s easily overlooked. But as their broker, you’re in a great position to catch it early. A quick check on when their financial year ends, and whether they’ve made an R&D claim recently could save them from losing out on thousands of pounds of relief.

Helping Clients Avoid Common Pitfalls

Finally, there’s real value in helping clients avoid the most common mistakes, many of which are surprisingly easy to make. A business might wrongly assume they don’t qualify because they’re not a tech company. Or they might forget to pre-notify HMRC or submit a claim without the right records in place.

Others mistakenly try to claim for work that doesn’t involve technical uncertainty, such as a basic website build or a standard app development with off-the-shelf tools. These claims won’t stand up, and a poorly handled submission could delay or even jeopardise future eligibility.

By spotting these risks early, you help your clients stay on the right side of the rules and avoid unnecessary stress. 

What to Do If Your Customer Doesn’t Qualify for Tax Reliefs

Not every business will qualify for R&D tax relief. As valuable as the scheme is, eligibility hinges on specific technical criteria, the nature of the work undertaken and whether the company has followed HMRC’s strict rules around documentation and timing. For some SMEs, particularly those in service-based sectors or with limited internal development work, R&D relief might simply be out of reach.

But missing out on tax relief doesn’t mean the end of the road for accessing growth capital. That’s where alternative finance solutions like revenue-based funding from 365 Finance come into play.

We specialise in revenue-based finance, tailored specifically for UK SMEs. Unlike traditional loans, repayments are linked to a business’s performance. This makes it a far more adaptable option for companies with seasonal income, fluctuating sales or tighter margins.

Final Thoughts

R&D tax relief is one of the most generous support schemes for UK businesses, but most SMEs aren’t using it. 

As a broker, you’re already helping clients secure the funding they need to grow. Helping them unlock R&D relief puts real money back in their pockets. However, if it’s not an option for your client, there’s always revenue-based finance which could be a great solution.

At 365 Finance, we provide revenue-based funding of £10,000 to £500,000 in capital so your customers can thrive all year round. We collaborate with thousands of UK brokerages, providing unsecured finance solutions to small businesses – and market-beating commissions for you as an introducer.

To find out more, please contact a member of our partnerships team or head to our website.