Quick answer: A tax credit payment is the cash HMRC pays a company that has surrendered its R&D tax relief for a payable credit, after notional tax and the PAYE/NIC cap. HMRC has published a target of processing 85% of claims within 40 working days, though claims selected for risk review take longer. Payment is made by bank transfer.
What is a tax credit payment?
A tax credit payment is the cash amount HMRC pays a company that has surrendered its R&D tax relief for a payable credit. The amount is the net surrenderable credit after notional tax and subject to the PAYE and NIC cap. HMRC has published a processing target of 85% of claims within 40 working days, though actual processing times vary, particularly for claims selected for risk review. Payment is made by bank transfer to the account on record with HMRC.
How does HMRC define the tax credit payment mechanics?
HMRC guidance on the payable credit mechanics is at CIRD90400 and CIRD90500 of the CIRD Manual for the merged scheme and CIRD89800 for RDEC. HMRC's published service standards for R&D claim processing are updated periodically and reported in HMRC's monthly performance statistics.
What does a tax credit payment look like in practice?
A loss-making software company files its R&D claim in June 2025 with a net surrenderable credit of £120,000. HMRC processes the claim and, in mid-August 2025, pays £120,000 to the company's bank account. A claim selected for enquiry would not be paid until the enquiry is resolved, which can take many months.
Related terms
Frequently asked questions
A tax credit payment is the cash amount HMRC pays a company that has surrendered its R&D tax relief for a payable credit, after deducting notional tax and applying the PAYE and NIC cap.
HMRC has published a processing target of 85% of claims within 40 working days, though actual processing times vary and claims selected for risk review are not paid until the enquiry is resolved, which can take many months.
Payment is made by bank transfer to the account HMRC holds on record for the company, once the net surrenderable credit has been calculated and any enquiry has been resolved.