Rules to be simplified and a new CGT relief for founders? 

Companies undertaking research and development (R&D) have faced a series of changes to the UK’s R&D tax relief regime in recent years. Alongside changes to the reliefs themselves, HMRC introduced additional compliance requirements designed to improve the quality of claims and tackle error and fraud. 

The 2026 Budget signals a welcome move towards simplifying some of that administration. The government has announced changes to the R&D claims process intended to improve the customer experience, including removing the separate claim notification requirement from 1 April 2027 and rationalising the additional information required to support claims from autumn 2027. 

What is the current position? 

For accounting periods beginning on or after 1 April 2023, first-time claimants must notify HMRC in advance that they intend to claim R&D tax relief unless they have previously made an R&D claim within 3 years of the end of the relevant claim notification period. It should however be noted that a claim made for a period starting before 1 April 2023 by amending the original corporation tax return on or after this date will not count as a previous R&D claim. 

Where notification is required, the claim notification form must normally be submitted within six months of the end of the period of account. No notification is required if the R&D claim itself is submitted before this point, however failure to notify within the required period can make any subsequent claim invalid. 

Separately, every R&D claim must currently be supported by an additional information form (AIF), which sets out a standardised set of requirements for information that HMRC requires to assess R&D claims. HMRC introduced these requirements as part of wider efforts to improve compliance in the R&D regime, which despite inconsistencies in the review process, has proved effective in reducing erroneous or spurious claims. 

This requirement applies to claims under the current merged R&D expenditure credit (RDEC), enhanced R&D intensive support (ERIS) and, where relevant, the previous regimes that they replaced. The AIF asks for details on the company and its agent, the breakdown of the qualifying R&D expenditure and the R&D projects included within the claim. These details must be submitted before, or on the same day as, the Company Tax Return containing the R&D claim. If both are filed on the same day, HMRC require that the AIF should be submitted first, although this is not supported by the legislation. 

What is changing? 

The Budget 2026 announcement is aimed at reducing administrative duplication while retaining the information needed by HMRC to assess R&D claims. 

From 1 April 2027, the government intends to remove the separate R&D claim notification form. This should eliminate an additional filing step and, importantly, the risk that an otherwise valid R&D claim is lost solely because a company has missed the separate notification deadline.  

The government also plans to rationalise the additional information requirements from autumn 2027. At present, the detailed AIF is a separate online submission supporting the Corporation Tax return. The Budget announcement indicates that this process will be simplified, although businesses should wait for the detailed implementation provisions and updated HMRC guidance before changing their procedures. 

Previous changes to the AIF, including its introduction in August 2023 applied immediately on passing the relevant legislation, rather than waiting for the next accounting period. It is therefore reasonable to assume that any changes will apply for next autumn. However, we would not recommend that companies delay claims unnecessarily as these are administrative changes and will not, by themselves, alter whether a company’s activities qualify as R&D or the quantum of relief available under the merged RDEC or ERIS regimes. 

Who will be affected? 

The removal of claim notification will particularly benefit companies making their first R&D claim, or returning to the regime after a gap, because these businesses are most likely to be caught out by the current notification rules. 

The measure will also benefit those companies who have traditionally made R&D claims after the normal corporation tax filing deadline (for example, if preparing for multiple periods at the same time) as they may fall foul of the rules due to believing they have an established history of making R&D claims. 

The wider rationalisation of additional information should be relevant to all companies making R&D claims. It may reduce duplicated data entry and make the filing process more straightforward, but companies should not interpret simplification as a relaxation of the need to substantiate claims. 

HMRC’s current approach requires claimants to explain the scientific or technological advance sought, the uncertainties encountered and how the work attempted to overcome them, as well as identifying qualifying expenditure. Maintaining contemporaneous project and cost records therefore remains important. 

What should companies do next? 

Until the changes take effect, businesses should continue to follow the existing rules. In particular: 

• check whether a claim notification is required and submit it within the existing deadline 

• continue to prepare and submit an AIF for each relevant accounting period before the associated R&D claim 

• retain clear technical and financial evidence supporting qualifying projects and expenditure 

• monitor the legislation and updated HMRC guidance for the precise transitional arrangements and the revised information requirements from autumn 2027. 

Businesses with accounting periods or filing deadlines spanning the change should take particular care over which rules apply. The announcement should simplify future administration, but missing a requirement that remains in force before the relevant commencement date could still jeopardise a claim. 

A welcome simplification, but robust evidence still matters 

Removing the R&D claim notification form from 1 April 2027 and rationalising the additional information process should reduce some of the procedural burden that has built up around R&D tax relief claims. For companies undertaking genuine R&D, fewer standalone filing requirements should make the claims process easier to manage. 

However, the underlying need to demonstrate that projects and expenditure meet the statutory conditions is unchanged. Companies should therefore continue to build good record-keeping into their R&D processes and review the detailed rules as the government and HMRC publish the implementation arrangements. 

If you are considering an R&D claim or are unsure how the forthcoming administrative changes affect your filing timetable, your usual Shaw Gibbs contact can help you review the requirements in light of your circumstances. 

And finally… 

The budget also saw the announcement of plans to introduce a new Founders’ Relief for Capital Gains Tax (CGT). This will enable founders of qualifying high-growth, innovative companies to pay a reduced 10% rate of CGT on up to £10 million of lifetime gains from 6 April 2027, subject to a further technical consultation. As proposed, the conditions are highly restrictive, requiring companies to meet 2 out of 3 demanding conditions on turnover growth, employee growth or R&D spend (as evidenced by qualifying R&D claims), however, for the right company, this offers significant advantages, with potential savings of up to £1.4m more than 45 times those available under BADR.