A plain-English explainer of R&D tax credits in fintech for UK teams working in payments, data and regtech. What qualifies, how to evidence it, and how credits fit alongside grants and debt.

R&D tax credits in fintech 2026, the UK applicant’s guide

A plain-English explainer of R&D tax credits in fintech for UK teams working in payments, data and regtech. What qualifies, how to evidence it, and how credits fit alongside grants and debt.

What are R&D tax credits in fintech?

R&D tax relief supports companies that tackle scientific or technological uncertainty to create or materially improve products, services or processes. Since April 2024, most claims flow through a single above-the-line credit mechanism, with an enhanced route for R&D-intensive SMEs that meet the intensity threshold. The aim is to recognise the genuine engineering work that underpins fintech products, not just commercial innovation.

Where fintech R&D usually sits

• Payments. Routing and orchestration, fraud detection, chargeback mitigation, real-time risk scoring, authorisation uplift.

• Data and analytics. Privacy-preserving matching, graph-based AML, synthetic data for model training, latency-tolerant pipelines.

• Regtech. Explainable screening models, adverse-media deduplication, scalable PEP and sanctions matching, audit-ready lineage and SM&CR evidence.

If your team had to test, iterate and resolve a technical uncertainty, the work may qualify even if the product itself is financial rather than deep-tech.

How the current scheme works, in plain English

1. Identify qualifying projects. The uncertainty must be technical, not just market or commercial.

2. Map costs to categories. Staff, externally provided workers, eligible subcontractors, software, cloud and data, consumables, prototypes, and limited participant payments for testing.

3. Calculate the credit. Claims are treated above the line in the P&L. R&D-intensive SMEs may access an enhanced outcome if they exceed the intensity threshold.

4. Submit the Additional Information Form (AIF). The AIF is mandatory and must be filed before or with the corporation tax return.

5. Keep evidence. Maintain contemporaneous records to support the technical narrative and apportionments.

Eligibility: quick checklist

Qualifying aim: Resolve a scientific or technological uncertainty in your payments, data or regtech system.
Evidence: Versioned tickets, architecture notes, experiment logs, benchmark results, failed approaches.
Activities: Prototyping, algorithm design, model training and tuning, scaling or throughput breakthroughs, fault tolerance and resilience, integrations where behaviour is not readily deducible.

SME vs large, 2025 at a glance

Company size

Route in 2025

Notes

SME, not R&D-intensive

Standard above-the-line credit

Same qualifying cost rules as large companies.

SME, R&D-intensive

Enhanced support

Applies where R&D intensity meets the threshold.

Large

Standard above-the-line credit

Shown in the P&L; taxable treatment applies.

Eligible cost categories for fintech

• Staffing costs. Salaries, employers’ NICs and pensions for hands-on developers, data scientists and qualifying technical leads.

• Externally provided workers and subcontractors. Claimable in part where contractual terms and location tests are met. Scope statements should clearly separate R&D from non-R&D deliverables.

• Software, cloud and data. Compute, storage, dataset access and model-training runs used directly in qualifying R&D. Use reasonable apportionments for mixed use.

• Consumables and prototypes. Items consumed in testing and proof-of-concept builds.

• Trial participants. Limited payments where directly related to eligible testing.

AIF basics: what fintech teams need to prepare

• One-page project summary per qualifying project, written in plain English.

• Technical uncertainty and why the solution was not readily deducible.

• Attempts and dead-ends, then the approach that worked.

• KPIs and metrics: authorisation rate change, fraud-loss delta, AUC or KS for models, latency or throughput.

• Costs mapped to HMRC categories with clear apportionment notes.

• Evidence pack: tickets, pull requests, experiment notebooks, benchmark snapshots.

Mini fintech examples

• Payments authorisation uplift. A gateway experiments with feature engineering from 3-D Secure 2.x and acquirer heuristics to reduce soft declines without raising fraud.

• AML false-positive reduction. A regtech scales graph-based entity resolution with privacy-preserving linkage, improving recall while maintaining precision.

• Open Banking data lineage. A platform prototypes deterministic lineage across streaming jobs so model outputs remain explainable for auditors.

Market context: who is winning and why

• Speed with regulatory discipline. UK players that pair product velocity with strong compliance and licensing execution tend to dominate their niches.

• AI with unit economics. Credit and risk platforms that combine explainable models with robust data pipelines and pragmatic cost control are scaling sustainably.

• Distribution and monetisation. Consumer and B2B fintechs with diversified revenue, partnerships and risk management are better placed in tighter funding cycles.

Grants that UK fintechs have used

• Innovate UK programmes have backed feasibility and prototype work in payments, regtech and data platforms.

• Banking Competition Remedies (BCR) grants have supported competition and SME-facing innovation.

• Horizon Europe collaboration allows UK firms to join multi-country research with academic and industry partners.

These routes are often used for feasibility, prototyping and collaborative R&D, with R&D tax credits then applied to eligible costs across the wider development programme.

Tip: When broad schemes are not open, look at targeted challenges in professional and financial services, innovation loans for later-stage development, or procurement-style programmes that fund product validation.

R&D tax credits, grants and debt financing: how they fit together

• Avoid double-funding the same cost. You can combine grants and tax relief, but do not claim R&D relief on costs already covered by public funding. Allocate budgets cleanly by work-package and cost type.

• Sequence intelligently. Use grants for higher-risk feasibility or demonstrators, then claim tax relief across eligible staff, cloud and subcontractors during development and scale-up.

• Consider venture debt post-validation. Once early traction and metrics are clear, venture debt can extend runway for commercial rollout. Understand covenants, warrants and interest mechanics.

• Watch market terms. In tighter funding environments, protect governance and cash covenants in loan and equity documents.

Application process

1. Scope projects against HMRC’s definition and select the applicable route.

2. Tag costs in the ledger to qualifying categories and document apportionments.

3. Assemble the AIF with technical narratives and cost breakdowns, then submit it before or with the CT600.

4. Compute the credit and reflect it above the line in the P&L.

5. Maintain evidence for potential HMRC checks.

Common CFO challenges and how to mitigate

• Boundary risk. Confusing feature build with qualifying R&D.
  Mitigation: Tie work to a clear technical uncertainty and a test plan.

• Thin evidence. Tickets without context or metrics.
  Mitigation: Add “uncertainty” and “advance” fields to tickets, archive model artefacts and benchmark deltas.

• Subcontract and overseas leakage. Ineligible location or over-claiming.
  Mitigation: Prefer UK delivery for claimable portions, ring-fence SOWs and apportion carefully.

• AIF quality. Generic descriptions that fail to show uncertainty.
  Mitigation: Include failed approaches, metrics and why the solution was not obvious.

• Cash-flow timing. Counting on payable credits too early.
  Mitigation: Layer grant tranches or venture debt to bridge, and model timelines conservatively.

FAQs

1) Do data-science experiments qualify if the model later ships into BAU?
Yes, if the R&D phase tackled genuine technical uncertainty. Shipping later does not invalidate earlier R&D.

2) Can we claim for synthetic data generation and cloud compute?
Yes, if used directly in qualifying R&D and reasonably apportioned. Keep logs and cost splits.

3) We received a public grant. Can we still claim?
Usually yes, but not on the same costs already funded. Separate budgets and track allocation carefully.

4) What is the enhanced support for R&D-intensive SMEs?
It is an elevated outcome for loss-making SMEs whose R&D intensity meets the threshold for periods starting on or after 1 April 2024.

5) Is the Additional Information Form (AIF) optional?
No. Claims must include an AIF. Build it as you go to avoid omissions.