At SA Accountancy, one of the most common misconceptions we see is that the R&D tax credit is reserved for companies with a formal laboratory, a patent portfolio, or PhD-holding researchers. It isn't. The credit is available to any business — including sole proprietors — that can show genuine technical uncertainty and experimentation in its work, regardless of industry, credentials, or company structure.
What actually counts as qualifying R&D activity
Qualifying activity is defined by the nature of the work, not the setting it happens in. Developing a new product or formula, improving a manufacturing or operational process, or building or meaningfully improving software can all qualify — provided the work involved real uncertainty about how to achieve the result, and a process of testing or experimentation to resolve it.
- Building custom software, internal tools, or a proprietary platform
- Redesigning a manufacturing process to improve yield or reduce waste
- Developing a new product formulation, even through trial and error
- Engineering a new checkout, logistics, or fulfilment system
Why only tech companies think this applies to them
Software and biotech companies are the most visible claimants, which creates the impression the credit is built for them specifically. In practice, manufacturers, food producers, construction firms, and agricultural businesses regularly qualify for work that doesn't look anything like a research lab — a new production process or a reformulated product line counts just as much as a new algorithm.
You don't need patents or advanced degrees either
Qualifying activities matter far more than who performed them or what came out the other end. A business doesn't need to have filed a patent, published a paper, or employed anyone with an advanced degree — the credit is judged on the technical uncertainty and experimentation involved in the work itself, not on formal research credentials.
The cost of not checking
By some industry estimates, fewer than a third of eligible small businesses ever claim the credit they're entitled to — not because they don't qualify, but because nobody on their team realised the work qualified as R&D in the first place. Reviewing your last one to two years of technical work against the qualifying criteria costs nothing and often uncovers a credit that's simply never been claimed.
