Quick answer: The BIS Guidelines are the statutory guidance, issued under section 1006 of the Income Tax Act 2007, that define R&D for UK tax purposes: a project seeking an advance in science or technology by resolving genuine scientific or technological uncertainty. HMRC applies them as the primary test for whether an activity qualifies for R&D tax relief.
What are the BIS Guidelines?
The BIS Guidelines are the statutory guidelines issued under section 1006 of the Income Tax Act 2007, originally published in 2004 by the Department for Business, Innovation and Skills and updated in 2023 by the successor department. They define research and development for tax purposes by reference to a project seeking an advance in science or technology through the resolution of scientific or technological uncertainty. The guidelines are the primary test HMRC applies when assessing whether an activity qualifies for R&D tax relief.
How does HMRC apply the BIS Guidelines?
HMRC incorporates the BIS Guidelines directly into its interpretation at CIRD81300 and cross-references them throughout the Corporate Intangibles Research and Development manual. The 2023 update, titled Guidelines on the meaning of research and development for tax purposes, clarifies the treatment of pure mathematics, data analysis, and software development, and restates the core advance-and-uncertainty test.
What do the BIS Guidelines look like in practice?
A robotics firm developing a new control algorithm tests the activity against the BIS Guidelines. The project must seek an advance in the overall knowledge or capability in a field of science or technology, not simply within the company, and must face uncertainty that a competent professional cannot readily resolve. If both conditions are met, the activity falls within the tax definition of R&D.
Worked example: applying the two-part test
The BIS Guidelines’ advance-and-uncertainty test has two parts that must both be satisfied. Take a manufacturing SME spending £180,000 developing a new welding process: first, does the process represent an advance in the field generally, not just within the company (yes, if no published technique achieves the same result); second, was the outcome genuinely uncertain before the work started (yes, if trial-and-error experimentation was required to resolve real technological uncertainty). Both conditions hold, so the full £180,000 qualifies, producing a £36,000 credit at the merged scheme’s 20% rate.
Why the Guidelines outrank internal ambition
A project can be commercially ambitious - genuinely novel for the company or its market - without satisfying the BIS test, because the advance has to be measured against the wider field of science or technology, not against the company’s own prior capability. This is one of the most common reasons HMRC challenges a claim at enquiry, and the reason specialist advisers test every project against the Guidelines before including it in qualifying expenditure. In practice, specialist advisers apply the Guidelines project by project rather than to the company as a whole, since a single accounting period can contain both genuinely qualifying work and adjacent commercial development that fails the test - splitting the two accurately is usually the difference between a defensible claim and an inflated one.
Related terms
Frequently asked questions
No. The CIRD Manual is HMRC's own internal guidance and incorporates the BIS Guidelines by reference. The BIS Guidelines themselves are the separate statutory guidance document that defines R&D for tax purposes in the first place.
A project must seek an advance in the overall knowledge or capability in a field of science or technology, and must face uncertainty that a competent professional cannot readily resolve. Both conditions must be met for the activity to qualify.
Because the advance has to be measured against the wider field of science or technology, not against the company's own prior capability. This is one of the most common reasons HMRC challenges a claim at enquiry.
Specialist advisers apply the Guidelines project by project rather than to the company as a whole, since a single accounting period can contain both genuinely qualifying work and adjacent commercial development that fails the test.