Where the engineering genuinely runs out
Qualifying work is where a competent professional cannot readily deduce the result. Novel circuit, RF or analogue design where meeting conflicting constraints at once, linearity, noise, power, electromagnetic compatibility, thermal, at a new frequency or process node, cannot be predicted from theory. Thermal and signal-integrity design where existing modelling cannot reliably predict behaviour. Embedded and firmware work where system behaviour is genuinely uncertain, from real-time determinism to driving novel silicon. Semiconductor development at new nodes or with novel device physics. Sensor and device development where sensitivity, stability or the fabrication route is uncertain. And power electronics using wide-bandgap devices with unresolved efficiency and interference trade-offs. Where integrating subsystems creates genuine system-level uncertainty, that too can qualify.
The work that feels like R&D but is not
Most hardware development, however demanding, is routine adaptation. Assembling known components to their datasheets, or building to a chip vendor’s reference design or evaluation board. Routine PCB layout with established design rules and standard tools. Selecting and integrating off-the-shelf modules to a specification whose behaviour is deducible, and the configuration and parameter tuning that follows. Cosmetic, enclosure and industrial design. Meeting a bespoke customer specification with established techniques, because commercial novelty is not technological advance. And compliance testing to confirm a known design meets a standard.
Where firmware meets the software rules
Electronics and hardware companies almost always write firmware, and it is judged by the same test as any software. The guidelines treat hardware and software implementations equivalently, so firmware qualifies only where it resolves a genuine technological uncertainty, and routine coding to a known specification does not, however integral it is to the product. The software guide sets out how that boundary works, including HMRC’s own examples, and it applies to embedded work in full.
Sector pitfalls we would check first
- Integration is not automatically advance. Combining known parts qualifies only where the combination creates genuine, evidenced system uncertainty, not because the product is complex.
- Firmware clears the software bar or it does not. Routine coding to a specification is out, whatever the hardware around it.
- Who claims when it is designed for you. Where a design house builds to your brief, the merged-scheme rules on subcontractors decide whether you or they claim.
- The sold prototype. Consumables in a prototype later sold in the ordinary course are excluded, common where a hardware prototype becomes sellable; test rigs and equipment are capital, outside the revenue claim. The rules are on qualifying costs.
Frequently asked questions
We designed a product around known chips and modules. Does that qualify?
Not on its own. Assembling components to their datasheets, or building to a vendor's reference design or evaluation board, is routine adaptation, not an advance. It qualifies where meeting conflicting constraints, or system behaviour, was genuinely uncertain and could not be deduced from theory.
Does our firmware count as R&D?
By the same test as software. The guidelines treat hardware and software implementations equivalently, so firmware qualifies only where it resolves a genuine technological uncertainty, real-time determinism, timing, or driving novel silicon, not where it is coding to a known specification.
Is our EMC and compliance testing R&D?
Testing to confirm a known design meets a standard is not. But R&D done to overcome a genuine technical problem revealed by that testing can qualify. The distinction is whether you are demonstrating conformance or resolving uncertainty.
A design house built it for us. Whose claim is it?
It depends on who intended and contracted out the R&D. Under the merged scheme the relief follows the decision-maker, so the client that commissioned the work may be entitled rather than the design house. Both should check the contract before either claims.