R&D tax credits are one of the most valuable reliefs available to UK businesses — and one of the most underused. HMRC's increased scrutiny over recent years put many founders off claiming altogether. A new pilot launched last month changes the dynamic. For SMEs that have been sitting on potential claims, it's worth paying attention.
What the Pilot Is
On 18 May 2026, HMRC launched its Targeted R&D Advance Assurance pilot. It runs for 12 months until May 2027 and is open to any qualifying SME.
The concept is straightforward. Before you submit an R&D tax relief claim, you can ask HMRC to confirm their view on up to two specific complex or higher-risk areas of that claim. If HMRC agrees those areas qualify, you can file knowing the most uncertain parts of your claim are unlikely to be challenged.
It's voluntary, free to use, and doesn't replace the normal claim process. You still submit through your Corporation Tax return as usual. But it removes the guesswork from the parts of the claim that keep most founders up at night.
What You Can Get Assurance On
Each application covers one project and up to two specific issues. The areas you can seek assurance on are:
- Whether the project meets the definition of R&D for tax purposes
- Whether overseas expenditure qualifies for relief
- Which party can claim for contracted-out R&D
- Whether the company qualifies for exemption from the PAYE and NIC cap
These four areas cover the most common points of dispute between HMRC and SME claimants. Getting clarity on any of them before filing reduces the risk of a post-submission enquiry significantly.
Why This Matters Now
R&D tax credits have had a difficult few years. HMRC increased compliance activity, tightened documentation requirements, and merged the SME and RDEC schemes. A lot of founders in tech, software, product development, and engineering quietly stopped claiming — or never started — because the risk of an enquiry felt higher than the potential reward.
That's an expensive decision. The R&D tax relief rate for SMEs under the merged scheme is 20% for loss-making companies and reduces the tax bill for profitable ones. On £100,000 of qualifying expenditure, the value of a claim is substantial.
The existing advance assurance scheme — technically available since 2015 — was so restrictive it barely got used. Only 80 companies applied in 2023/24 despite around 11,500 eligible SMEs. The new pilot is a meaningful improvement in accessibility, and it launched just last month.
Does Your Business Qualify?
The relief is broader than most founders assume. R&D for tax purposes doesn't require a lab, a team of scientists, or a formal research programme. HMRC's definition covers any project that seeks to advance science or technology by resolving scientific or technological uncertainty.
In practice, that includes:
- Building software that solves a technical problem that couldn't be solved with existing tools
- Developing a new product, process, or material where the outcome wasn't predictable
- Modifying an existing process in a way that required genuine technical problem-solving
- Failing — an unsuccessful R&D project can still generate a qualifying claim
If your business has invested time, money, and technical resource into solving a problem that wasn't straightforward, there's a reasonable chance some of that investment qualifies.
What Founders Should Do Now
The pilot is live and running until May 2027. Here's how to think about it:
- If you've been putting off an R&D claim due to uncertainty, the pilot is the most direct route to clarity. Identify the specific aspect of your claim you're unsure about and apply for assurance on that point before filing.
- If you've never claimed but think you might qualify, now is a good time to get a proper assessment. The pilot doesn't remove the need to build a well-documented claim — but it removes the biggest source of risk from it.
- If you're already claiming confidently, the pilot may be less relevant. But if your claim involves overseas work, contracted-out R&D, or the PAYE cap, advance assurance adds genuine value.
- Act within the window. The pilot runs until May 2027. It's not permanent and may not be renewed in the same form.
R&D tax credits exist to reward businesses that take technical risk and push their sector forward. The new advance assurance pilot makes it easier to claim what you're entitled to — without the uncertainty that has put so many founders off in recent years.
If you're not sure whether your business qualifies or want help assessing a potential claim, find out more about our R&D Tax Credit service or speak to a Runway co-founder.
