R&D tax credits for AI and automation projects
If your business is building something genuinely new with AI or automation, part of the cost may qualify for research and development tax relief. Here is how it works, whether AI and software count, and how we help you scope a project cleanly.
What R&D tax relief is
Research and development tax relief lets companies recover some of the cost of work that seeks a genuine advance in technology while overcoming real technical uncertainty. It is claimed through your company tax return, and under the current merged scheme most companies claim through a single set of rules.
The rules and rates change, and claims are scrutinised, so this page is a plain English orientation, not tax advice. Always use a qualified adviser or accountant for an actual claim.
Does AI and software qualify
It can. Building or meaningfully adapting software, integrating systems that were not designed to work together, or developing an AI capability where the outcome was not certain at the outset, are the kinds of work that may qualify, because they involve resolving technical uncertainty rather than simply using an off the shelf tool.
Routine configuration of an existing product usually does not qualify. The line sits at whether competent professionals faced genuine uncertainty and had to work it out. That distinction is exactly where good scoping and record keeping matter.
What tends to qualify
A technical advance
Work that pushes past what is readily available, not just applying a known solution.
Genuine uncertainty
A problem where the answer was not obvious to a skilled professional at the start.
Real project records
Notes, versions and decisions that show the uncertainty and how you tackled it.
Eligible costs
Staff time, some subcontractor and software costs tied to the qualifying work.
A UK company
The relief is for companies within UK corporation tax.
A defensible boundary
A clear line around what was R&D and what was routine, ready to stand up to scrutiny.
How we help
We are not tax advisers and we do not file claims. What we do is help you scope and document an AI or automation project so that, if it involves genuine technical work, the story is clear and the records exist. That makes any claim your accountant prepares far stronger.
If you are planning a build, it is worth thinking about this at the start, not the end, because good records made along the way are hard to recreate afterwards. Speak to a qualified R&D adviser for the definitive position on your claim.
Common questions
Can I claim R&D tax credits for AI?
Possibly, if the work involves a genuine technical advance and real uncertainty, such as building or integrating AI where the outcome was not certain. Routine use of an existing tool does not qualify. Take professional advice.
Does software development qualify?
It can, where it resolves technical uncertainty rather than applying a known solution. Bespoke integration and novel capability are more likely to qualify than configuration.
What costs can be included?
Typically staff time, certain subcontractor costs and consumables tied to the qualifying work. Your adviser will confirm what applies under the current rules.
Is this tax advice?
No. This is a plain English overview. R&D claims are scrutinised, so use a qualified adviser or accountant for an actual claim.
When should I think about this?
At the start of a project. Good records of the uncertainty and how you tackled it are hard to recreate later and make a claim much stronger.
More from our consultancy
Scope your project the right way
Book a short chat and we will help you shape and document an AI project cleanly, ready for your adviser.