The changed R&D tax landscape for Architects

[edit] What’s Changed and What Architects Need to Know

If your practice has under 500 employees, you’ll have historically been classed as an SME and that means the recent overhaul of the R&D tax relief regime is bound to affect you. Now is the time to get your head around what’s changing. Andy Hastie, Head of Business Development & Marketing at Invennt reveals what’s changed.

[edit] The Big Picture: A Merged Scheme Replaces SME and RDEC

From accounting periods beginning on or after 1 April 2024, the old twin-track system was replaced by a single merged scheme. The only exception being for loss-making, R&D-intensive SMEs, which continue to benefit from a more generous relief but due to the thresholds of what qualifies as “R&D intensive,” very few architecture practices qualify.

Under the merged scheme, all qualifying companies receive a 20% above-the-line credit for qualifying R&D expenditure, taxed as income. The net benefit, after corporation tax, will typically be around 15–16%. That’s a noticeable reduction for many architecture practices that have historically enjoyed the more generous uplift under the SME rules.

[edit] R&D Intensive Businesses

A limited carve-out remains for loss-making SMEs whose R&D expenditure makes up at least 30% of their total costs. These firms can continue to access a higher rate of relief under the Enhanced R&D Intensive Support (ERIS) scheme. There’s also a one-year “grace” period for companies that qualified previously but fall just below the threshold in a later year. In practice, few architectural firms will meet that 30% intensity level, but those working heavily in experimental design, sustainability modelling, or digital prototyping may wish to explore if this applies.

[edit] Claim Notification and Additional Information Requirement

Many practices assess R&D every two years, which can create an administrative hoop for some firms to jump through. For accounting periods beginning on or after 1 April 2023, firms had to submit a Claim Notification Form (CNF) within six months of the period end to alert HMRC of their intention to claim.

In addition, all new or amended claims now require an Additional Information Form, providing key details about the qualifying projects and costs. Missing either requirement could invalidate or delay a claim.

[edit] Clarity on Contracts: Lessons from the Quinn Tribunal

One of the long-running headaches for architects has been the issue of “subsidised” or “contracted-out” R&D. Essentially, whether client funding makes part of your R&D ineligible for relief. HMRC had historically taken a restrictive view, arguing that much of the R&D undertaken within client commissions was ineligible. The Quinn (London) Ltd tribunal and subsequent cases helped clarify this point. The rulings confirmed that general client payments for project delivery do not automatically make associated R&D work “subsidised”, provided the research is undertaken on the contractors own initiative and not at the direct request of the client.

HMRC has since updated its guidance to reflect those decisions, bringing some much-needed clarity to how architectural R&D is treated.

[edit] Planning Ahead

To ensure there are no surprises practices should get in touch with Invennt to explore how the changes impact their claim. Invennt can help you:

• Model your claims under the merged scheme to see how the new rate affects your net benefit.
• Assess ERIS eligibility if your R&D intensity could meet the 30% threshold.
• Review contracts to ensure that R&D is clearly distinguished from client-mandated development.
• Check timelines for submitting CNFs and Additional Information Forms.
• Tighten your documentation — maintain technical narratives, design logs, and cost records to withstand future HMRC scrutiny.

While the new regime will feel less generous for many, it’s no reason to stop investing in innovation. Architectural practices that remain diligent, well-documented and alert to the shifting landscape can still make strong, defensible claims. The key is understanding that from April 2024 onwards, the rules have changed, and success will come down to how nimbly your practice adapts.

This article appears in the ACA Autumn 2025 newsletter as "The New R&D Tax Landscape" written by Andrew Hastie Head of Marketing & Business Development. [email protected].

--Association of Consultant Architects