The United Kingdom remains one of the world’s leading hubs for research, development, and innovation. To encourage technological advancement and attract foreign investment, the UK government offers generous R&D tax credits to companies undertaking eligible research and development activities.
For overseas businesses operating in the UK—either directly or through a subsidiary—R&D tax relief presents a valuable opportunity to recover a portion of their innovation spend. However, navigating the eligibility rules, structuring requirements, and HMRC documentation process can be complex.
At Fraser Bond, we help international firms access and maximise UK R&D tax incentives with full compliance, strategic planning, and audit-ready claims.
Research and Development (R&D) tax credits are a government-backed incentive designed to encourage innovation across all sectors. They provide a cash rebate or corporation tax reduction for qualifying R&D expenses.
The scheme applies to projects that seek to:
Make an advance in science or technology
Overcome scientific or technical uncertainty
Develop or improve products, services, or processes
The UK’s R&D tax credit system includes two main schemes:
SME R&D Relief – For companies with fewer than 500 staff and under €100m turnover
R&D Expenditure Credit (RDEC) – For larger companies or subsidiaries of overseas groups
To be eligible, the R&D activity must be carried out by a UK-based entity that is:
Subject to UK corporation tax
Performing qualifying R&D work in the UK (or in some cases, under contract from the UK)
Paying for eligible R&D-related costs such as staffing, software, and consumables
Overseas parent companies cannot directly claim UK R&D tax relief—but they can benefit through:
A UK subsidiary conducting the R&D and submitting the claim
Contracting R&D to a UK business, provided contractual conditions and risk ownership are met
Fraser Bond helps foreign groups structure their UK operations to meet eligibility while aligning with international tax and transfer pricing rules.
Employee salaries and NIC for staff directly involved in R&D
Software licences and cloud computing costs used for development
Consumables and materials consumed during the R&D process
Subcontracted R&D (limits apply under SME scheme)
Utilities used in the development facility
Clinical trials and testing for life sciences companies
Up to 27% of eligible R&D spend as cash benefit
Loss-making companies can surrender losses for cash credits
Up to 20% of eligible spend as taxable credit
Claimed above the line (visible on P&L) for improved investor reporting
The R&D intensity threshold (40%+ of expenditure on R&D) has become more relevant since recent HMRC reforms, especially for smaller businesses.
Set up a UK limited company liable to UK corporation tax
Ensure that the R&D is carried out in the UK or supervised by UK-based staff
Maintain detailed documentation, including project logs, cost breakdowns, and technical justifications
Consider intercompany contracts and transfer pricing impact when the UK subsidiary is part of a global group
Seek specialist support for first-time claims or high-value submissions that may attract HMRC scrutiny
Fraser Bond works with specialist R&D tax consultants to prepare compliant, defensible claims that maximise returns.
Our comprehensive services for international businesses include:
R&D project identification and eligibility review
UK entity setup and corporation tax registration
Structuring advice for contract and group R&D activities
Technical documentation and cost apportionment preparation
HMRC submission management and claim tracking
Audit support in the event of an HMRC enquiry
We align your R&D tax planning with broader UK entry, legal, and operational strategies.
The UK’s R&D tax credit regime offers substantial benefits to overseas companies with innovative UK operations. With proper structuring and expert support, your business can recover a significant portion of its development spend while building credibility with stakeholders and regulators.
Fraser Bond provides strategic, end-to-end assistance to help foreign companies unlock R&D tax relief in the UK—ensuring full compliance, maximum value, and long-term innovation success.
