10th August 2026
LimestoneGrey: A medtech founder’s five-point check on the new R&D schemes
Med-tech companies rarely struggle to show that their work is R&D. Prototyping, verification testing, materials that must survive repeated sterilisation: the science is usually the easiest part of the file. What catches founders out is the machinery around it, most of which changed for accounting periods beginning on or after 1 April 2024.
Five checks can be made, each taking just a few minutes, but any one of them could determine whether a company is able to make a claim at all.
- Which scheme applies to your period?
Look at the date your accounting period began, not the date you are filing.
A period beginning on or after 1 April 2024 falls under the current schemes: the merged R&D Expenditure Credit, or Enhanced R&D Intensive Support for loss-making, R&D-intensive SMEs. A period that began earlier sits entirely under the old SME and RDEC rules, so a twelve-month period starting 1 March 2024 is old-scheme from beginning to end.
That matters twice over: old periods follow different rules on grants, subcontracting and overseas work, and many remain open to amendment until the final deadlines in March 2027. Which R&D scheme applies to your company works through the dates.
- Do you pass the 30% intensity test?
This is only relevant if you are a loss-making SME, which most pre-revenue med-tech companies are.
In order to stress test this for your business, divide your relevant R&D expenditure by your total relevant expenditure. Thirty per cent or more and you claim ERIS at up to 26.97p per £1 in cash, rather than 16.2p under the merged scheme. As an illustrative example: on £100,000 of qualifying spend with sufficient losses: £100,000 x 186% x 14.5% = £26,970.
Two additional factors can move the answer unexpectedly. Connected companies count on both sides of the ratio, so group structure can sink a company that passes easily on its own numbers. And total expenditure shifts the ratio as much as R&D does: build out a commercial team ahead of a launch and intensity can fall below 30% while the development programme carries on unchanged. A one-year grace period protects a company whose intensity dips after a qualifying year, which is intended to be treated as a buffer rather than a plan.
- Have you protected the notification deadline?
Do this one first if you have never claimed.
Certain companies, including first-time claimants, must notify HMRC within six months of the end of the period of account. If the requirement applies to you and you miss the deadline, the claim is invalid, however strong the work. HMRC has no discretion to accept a late notification, there is no appeal, and being inside the two-year amendment window makes no difference.
Count the exact day: a 30 June year end gives 31 December, a 31 December year end gives 30 June. The claim notification requirement gives further information on whether the rule applies to your business.
- Is your Additional Information Form doing its job?
Every claim submitted since 8 August 2023 needs one, and it must reach HMRC before or with the CT600, never after. Filing the return first makes the claim defective on sequence alone.
The AIF is normally the first thing a compliance officer reads, so treat it as the claim rather than a wrapper around it. It names your senior internal R&D contact, who should be someone able to answer technical questions, and every agent on the claim. Project descriptions that read as product marketing, listing features rather than the advance sought and the uncertainties resolved, fail most often.
- Where was the work actually done?
Subcontractor payments qualify only where the R&D is undertaken in the UK, and externally provided workers only where they are subject to UK PAYE and Class 1 National Insurance. The test is where the work happens, not where the contractor invoices from, so multi-site providers should split their fees.
The exception to this rule is deliberately narrow. Qualifying overseas expenditure applies where conditions necessary for the R&D, whether geographical, environmental, social or regulatory, are not present in the UK and cannot reasonably be replicated here: a regulator requiring an in-territory investigation, or a participant population the UK cannot supply. Cost savings and workforce availability are expressly excluded, so a cheaper overseas site does not get through however sensible the commercial decision. If you are stating you are an exception to the rule and including oversea subcontractor costs in your claim, your justification needs to be sound and backed by evidence.
Five minutes on those points will tell you whether your next claim is on solid ground. HMRC checked around one in six R&D claims in 2023-24, its latest published figure, and the ones that fail are not always the ones where the science was weak.
We work with med-tech companies across the UK, alongside the Welsh cluster this network connects. For a view on where the qualifying boundary falls in your own programme, our medtech guide is a starting point, or talk it through with a chartered adviser. If we do not think you should claim, we will tell you so.
Matthew Jones ACA CTA is managing director of LimestoneGrey, a firm of chartered tax advisers and chartered accountants specialising in R&D tax relief, based in Cardiff.