R&D tax claim software can speed up the process of preparing a claim. It cannot decide what qualifies, it cannot write a technical narrative that will survive an HMRC compliance check, and it cannot file your corporation tax return. Understanding exactly where the tools stop and human judgement starts is what separates a clean, accepted claim from one that sits in an HMRC enquiry queue for months.
This guide covers what R&D tax claim software actually does, the compliance gaps that catch companies out in 2025/26, how the merged scheme and ERIS work in practice, and when a qualified accountant gives you a materially better outcome.
What the Merged Scheme Means for Your Claim Calculation
From 1 April 2024, the old SME R&D tax credit and large-company RDEC regimes were replaced by a single merged scheme for most companies, introduced by Finance Act 2024 Schedule 1 (which inserted the merged RDEC and ERIS regime into CTA 2009). The rate is a 20% expenditure credit on qualifying R&D costs, applied under the merged RDEC rules. That credit is taxable income, so the net benefit after corporation tax varies by your rate.
A worked example: a company with £100,000 of qualifying R&D expenditure claims a £20,000 expenditure credit. If the company pays corporation tax at the main rate of 25% (profits above £250,000), the credit is first brought into account as taxable income and then reduces the tax liability. The effective net benefit is roughly £15,000 on that £100,000 of qualifying spend, that is 15p in the pound. For a company on the small-profits rate of 19% (profits under £50,000), the arithmetic shifts: the £20,000 credit, taxed at 19%, gives a net benefit of around £16,200, approximately 16.2p per pound of qualifying expenditure.
The exception is the Enhanced R&D Intensive Support scheme (ERIS), which applies to loss-making SMEs where qualifying R&D expenditure is at least 30% of total expenditure for the accounting period. ERIS offers a payable credit of up to 14.5% of the surrenderable loss, alongside an 86% additional deduction on qualifying costs. Unlike the merged RDEC expenditure credit (which is taxable income), the ERIS payable credit is not taxable. For an R&D-intensive company burning cash, this can generate a direct cash repayment from HMRC rather than a reduction in a tax bill that does not yet exist.
Both the merged scheme and ERIS apply to accounting periods beginning on or after 1 April 2024. Claims for earlier periods follow the old SME/RDEC rules that applied at the time.
| Scheme | Who it applies to | Rate | Payable if loss-making? | Accounting periods |
|---|---|---|---|---|
| Merged RDEC | Most UK companies | 20% expenditure credit (taxable) | Yes, subject to PAYE/NIC cap | Beginning on or after 1 April 2024 |
| ERIS | Loss-making SMEs with R&D spend at least 30% of total costs | Up to 14.5% payable credit on surrenderable loss; 86% additional deduction | Yes (cash repayment) | Beginning on or after 1 April 2024 |
| Old SME scheme (pre-April 2023) | SMEs (now merged away) | 130% additional deduction + 14.5% payable credit | Yes (legacy only) | Accounting periods beginning before 1 April 2023 |
| Old SME scheme (April 2023 to March 2024) | SMEs (now merged away) | 86% additional deduction + 10% payable credit (Finance Act 2023 s.4) | Yes (legacy only) | Expenditure on or after 1 April 2023, periods beginning before 1 April 2024 |
The reason this matters for R&D tax claim software is that the ERIS intensity test requires knowing your total company expenditure for the period. Software that pulls data only from your R&D project tracking (and not from your full accounting system) may calculate the intensity ratio incorrectly and steer you into the wrong scheme.
What Qualifying R&D Costs Look Like in Practice
Qualifying costs for accounting periods starting on or after 1 April 2024 cover six main categories. Each has conditions that software does not always handle correctly.
Staffing costs include salaries, wages, bonuses, employer NIC (currently 15% above the £5,000 secondary threshold for 2025/26), and pension contributions for staff directly engaged in the R&D activity. Time split between R&D and non-R&D work is claimable on a reasonable apportionment; staff doing only administrative or sales work do not qualify even if they are on the same payroll.
Externally provided workers (EPW) and subcontractors are subject to a 65% cap on payments to non-connected parties. If you use a contractor at arm's length (the typical situation), you can only include 65% of what you paid them, not the full invoice amount. Connected-party arrangements can claim up to 100% but must meet specific conditions. Software that applies a flat 100% on all contractor costs is producing an overclaim.
Software licences used in the R&D project qualify, on a proportionate basis where the licence covers other uses. A software development tool used exclusively for the R&D project is claimable in full.
Consumables (materials, chemicals, fuel, power, water) that are used up in the R&D activity qualify. Consumables that go into a product sold to a customer do not qualify unless the purpose was the R&D process itself.
Data licences and cloud computing costs became qualifying expenditure from 1 April 2023. Database access, data usage licences, storage, and cloud-based computing platforms used in R&D now all count, provided the use is for qualifying R&D activity and not for supporting indirect activities.
Overseas costs present the sharpest restriction from 1 April 2024. Contracted R&D activity taking place outside the UK is no longer qualifying expenditure, with limited exceptions for conditions that inherently require the overseas location (such as a clinical trial in a specific geographic location). Many software companies in the UK use overseas developers or cloud-based contractor networks. If those contractors are doing qualifying R&D work, their costs may not be claimable under the new rules. R&D claim software that was built before April 2024 may not apply this restriction.
Three Compliance Requirements That Software Often Misses
The Additional Information Form
Since 8 August 2023, every R&D claim made on or after that date requires a mandatory Additional Information Form (AIF) submitted to HMRC before the CT600 is filed, regardless of when the accounting period started (per SI 2023/813). The AIF contains the project description, the qualifying expenditure breakdown by category, and the contact details of the person who prepared the claim. Without a valid, pre-filed AIF, the claim in the CT600 is invalid regardless of how accurate the figures are.
Not all R&D software platforms include AIF submission. Some generate the data you need to complete an AIF separately; others submit it as part of their service. This is a factual question to ask any platform before you commit to it.
The Advance Notification Requirement
Companies that have not made an R&D claim in the last three accounting periods must notify HMRC of their intention to claim within six months of the end of the accounting period in which the R&D took place. For a company with a 31 March 2025 year end, the notification deadline is 30 September 2025. Miss the deadline and you cannot claim for that period.
This is a simple administrative step, but it catches first-time claimants who do not discover R&D tax credits until they are already past the notification window. If you have been doing qualifying R&D for several years but never claimed, the window for prior years may already have closed.
The Technical Narrative
The technical narrative is the part of an R&D claim that describes the scientific or technological uncertainty your project was resolving, how you approached it, and what the advance in the field was. HMRC's definition of qualifying R&D requires that the work seeks an advance in a field of science or technology by resolving a genuine uncertainty that a competent professional in the field could not readily resolve. Mathematical advances count as science from 1 April 2023.
Software platforms guide you through a questionnaire and convert your answers into a narrative. The quality of the output depends entirely on the quality of the input. A generic answer to a generic question produces a generic narrative. HMRC's compliance teams are experienced at identifying templated narratives where the project description could apply to any company in the same sector. That pattern is one of the common triggers for an enquiry.
A technically specific narrative, written with the detail of your actual system architecture, the specific uncertainty you faced, and the iterative steps you took to resolve it, passes scrutiny because it describes something real that HMRC cannot simply dismiss as a template. No software writes that without specific input from the people doing the work.
When R&D Tax Claim Software Is a Sensible Tool
For some businesses, an R&D software platform genuinely adds value. The cases where it works well share certain characteristics.
A company working on a single, clearly defined software project where all the development work is done by directly employed UK staff, with time tracked in a project management tool (Jira, Linear, GitHub issues), and where the technological uncertainty is specific and well-understood by the founders, can produce a high-quality AIF through a good software platform. The founders know what they built and why it was hard; the software provides the structure to explain it to HMRC in the right format.
Similarly, a growing software business making its second or third claim, where the qualifying costs are now well understood, all staff are on PAYE, and the R&D scope is clearly separated from commercial product development, can use software to maintain consistency across claims without needing to re-explain the whole picture to an adviser each year.
Software also works well as a preparation and scoping tool even when an accountant will do the final work. Running your costs through a platform's eligibility checker before meeting your accountant gives you a working estimate of the claim value and highlights which cost categories need better documentation.
When Software Creates More Risk Than It Resolves
Several scenarios make a software-only approach genuinely risky.
If your R&D involves subcontractors or externally provided workers, the 65% cap and the new overseas restrictions from April 2024 create complexity that software handles inconsistently. An incorrect application of these rules leads either to an overclaim (which triggers an enquiry and potential penalties) or an underclaim (which costs you money).
If your claim value is substantial, the enquiry risk increases with claim size. A larger claim warrants a more detailed and specific technical narrative. A software-generated narrative is more likely to attract scrutiny at the volumes where the review resources are worth deploying.
If you are claiming under ERIS, the intensity threshold requires a complete picture of your total expenditure, which means pulling accurate cost data from your accounts. Software that does not integrate with your accounting system or that relies on manually entered data is more likely to get the denominator wrong, potentially miscategorising you as ERIS-eligible (or ineligible) when the correct position is the opposite.
If you have never claimed before and are uncertain whether your work qualifies, a software platform cannot give you a definitive answer on eligibility. The platform will tell you what you entered qualifies. A qualified adviser will tell you what actually qualifies based on an understanding of your work and how HMRC applies the definition in practice.
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| A | B | C | D | E | F | G | H | I | J | K | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Your figures (edit the blue cells) | ||||||||||
| 2 | Total operating expenditure | £500,000 | |||||||||
| 3 | R&D staff costs | £120,000 | |||||||||
| 4 | R&D consumables | £10,000 | |||||||||
| 5 | R&D software | £5,000 | |||||||||
| 6 | Your R&D benefit | ||||||||||
| 7 | Qualifying R&D spend | £135,000 | |||||||||
| 8 | R&D intensity ratio | 27.0% | |||||||||
| 9 | Estimated net benefit (merged RDEC 20%) | £20,250 | |||||||||
| 10 | £20,250 estimated net R&D benefit (below the 30% ERIS threshold) | ||||||||||
| 11 | |||||||||||
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Software vs Qualified Accountant: A Decision Framework
| Factor | Software platform | Qualified accountant |
|---|---|---|
| Technical narrative | Questionnaire-generated; quality depends on your input | Written from direct conversation with your team; specific to your project |
| Cost calculation | Automated from data you enter; may miss category rules (65% cap, overseas restrictions) | Pulled from your accounts; applies current rules including post-April 2024 changes |
| Additional Information Form | Varies by platform; not all include it | Included as part of the claim preparation |
| Advance notification | May or may not flag the deadline | Tracked as part of your compliance calendar |
| CT600 filing | Most platforms do not file your full return | Claim integrated into your CT600 and filed together |
| HMRC enquiry support | Usually not included; you manage the enquiry yourself | Accountant responds on your behalf and holds the file |
| ERIS intensity test | Requires accurate total-cost data; unreliable if not integrated with accounts | Calculated from your actual accounts |
| Overseas subcontractor restriction | Variable; older platforms may not apply April 2024 rules | Applied as a matter of course for post-April 2024 periods |
How the Claim Integrates with Your Corporation Tax Return
An R&D claim is not a standalone document. The expenditure credit (or, for ERIS, the additional deduction and payable credit) flows through to your CT600 corporation tax return and must be consistent with the figures in your accounts. HMRC cross-references the R&D claim against your corporation tax computation.
If the qualifying costs in your R&D claim are higher than your accounting software shows for those cost categories, that discrepancy is visible to HMRC and is one of the first things a compliance officer asks about. A claim prepared in isolation by a specialist platform, without access to the same data your accountant uses for the accounts, creates exactly this kind of discrepancy.
The cleanest position, and the one least likely to trigger a compliance check, is where the same qualified person prepared both the accounts and the R&D claim, pulling from the same data source. That is what we do at Holloway Davies. The R&D claim is prepared alongside the annual accounts and filed together as a single, internally consistent CT600 return.
If you are a one-person software company or a small software company uncertain about what qualifies, the starting point is understanding the boundary between qualifying R&D and ordinary development work before you enter anything into a software platform. The platform will not tell you that boundary; it will process whatever you say qualifies. Getting that threshold right is what a qualified adviser adds.
For AI and emerging-tech companies, the question of what constitutes a genuine technological uncertainty (rather than applying existing techniques in a new context) is a sharper issue still. Our guide on R&D tax credits for AI startups covers the specific tests HMRC applies in that sector.
What a Well-Prepared Claim Looks Like
A claim that passes HMRC scrutiny has four characteristics, regardless of whether software was used in its preparation.
The technical narrative describes a specific technological uncertainty at the start of the project (not a business problem, not a commercial challenge, but a genuine uncertainty about whether or how a scientific or technical approach could work) and explains the iterative process of resolving it. It names the specific techniques tried, the results, and how those results led to the next step. It cannot be a generic description of software development.
The cost calculation matches the company's accounts. Every figure in the R&D schedule can be traced to a line in the payroll report, a subcontractor invoice, or a software licence record. The 65% subcontractor cap is applied where appropriate. No overseas contractor costs appear for periods from 1 April 2024 unless the overseas-exception conditions are met.
The AIF was filed with HMRC before the CT600, with accurate project descriptions and correct expenditure totals by category. The contact details on the AIF belong to someone who can actually answer HMRC's questions if an enquiry follows.
The advance notification (where required) was submitted on time. For a first-time claimant, this is the single administrative step that software platforms are most likely to fail to flag because it sits outside the claim preparation process.
The Follow-On Question Most Claimants Have
The most common question after reviewing the claim mechanics is: "Does my work actually qualify?" That is a judgment call on the specific facts of your project, and it is not one a software platform can make reliably. Our guide to how to claim R&D tax credits walks through the qualifying definition in detail, including the types of technological uncertainty HMRC accepts and the documentation that supports a claim if it is ever queried. If you are running a tech business and want a straight answer on whether what you are building qualifies, speak to us directly. The scoping conversation takes less time than completing a software platform's questionnaire, and you get a view from someone who has seen what HMRC accepts and what it challenges.