Written by Iseabail Robbie (Commercial Executive) at TCM Capital
The Autumn Budget on 28 October left the core rates and scope of UK R&D tax relief unchanged. Instead, it targeted the area that has frustrated claimants most: administrative complexity. The government announced that the Claim Notification Form (CNF) will be abolished for claims made on or after 1 April 2027 and that the Additional Information Form (AIF) will be simplified starting Autumn 2027. For businesses expanding into the UK, including those from Spain, this is welcome news.
Procedural Relief, Not Structural Change
- Claim Notification: Currently applies to accounting periods starting on or after 1 April 2023. It requires first-time claimants (or those who haven’t claimed recently) to notify HMRC of their intent to claim within six months of the end of the accounting period. Missing this deadline means losing the right to claim for that period entirely.
- Additional Information Form: Introduced in August 2023, this mandatory form requires companies to submit detailed project and cost breakdowns before submitting their corporate tax return.
Neither change alters the financial value of the relief available. Instead, both streamline how businesses access it. Alongside these announcements, the government launched a consultation – Corporate Tax Simplification for Business Investment – to explore further administrative improvements.
Why Were These Measures Introduced?
Both requirements were introduced to reduce fraud and error in the scheme. While effective, they imposed a heavy administrative burden. Genuine claimants, particularly SMEs without dedicated tax advisors, frequently found themselves disqualified by unfamiliar procedural rules rather than the substance of their R&D work.
The CNF requirement also restricted flexibility. As notification must occur within six months of the period end, first-time claimants often lost the ability to use the standard two-year retrospective amendment window. Whether its removal fully restores this two-year look back period will depend on the final legislation.
What This Means for Spain-UK Cross-Border Businesses
Spanish companies establishing a footprint in the UK are almost always first-time R&D claimants. A new UK subsidiary carrying out local development work may qualify, but newly established entities are the most vulnerable to missing administrative deadlines while focusing on launch operations. Removing the notification requirement significantly lowers this barrier to entry.
However, removing notification requirements changes the process, not eligibility:
- Questions regarding group structure, intellectual property ownership and subcontracted foreign R&D expenditure remain subject to specific overseas rules
- Groups operating across Spain and the UK should evaluate UK R&D relief alongside Spain’s separate R&D tax incentives to maximise cross-border tax efficiency
Key Areas of the New Consultation
The consultation, which is open until 21 November 2026, looks beyond these two announcements to assess broader friction points, including:
- ERIS Complexity: Whether the definitions powering Enhanced R&D Intensive Support (ERIS) ratio are too complex.
- PAYE/NIC Friction: How the PAYE/NIC cap impacts early-stage, growing businesses with smaller payrolls.
- Going Concern Requirements: Addressing technicalities that cause companies to lose eligibility during funding rounds or restructuring.
- Digital Portal Improvements: Simplifying the AIF, expanding the Advance Assurance pilot and introducing claim-tracking features to save progress.
Practical Next Steps
- Maintain Current Compliance: Notification rules remain in force until April 2027. The current form should not be skipped for current or upcoming accounting periods before that date.
- Monitor Guidance: Draft legislation and HMRC operational guidance will clarify the exact format of the streamlined AIF over the coming months.
- Set up R&D Tracking: Newly established UK subsidiaries should map out qualifying activities and record-keeping processes from day one, rather than waiting for year-end closing.
After several years of change, a Budget that removes complexity rather than adding to it is a welcome one. Not every part of it was good news for founders, but on R&D relief, the direction of travel is towards making a valuable incentive easier to claim.
For further information, please feel free to contact the author:
Email: irobbie@tcmcapital.co.uk
Mobile: +44 7576 546809