Recent Finance Act 2025 changes mean companies must now actively choose how instalments are treated, instead of having them handled automatically in the background.

Historically, once an R&D tax credit claim was agreed, instalments were usually applied according to the company’s tax position at the time. If there was corporation tax due, the credit would typically reduce that bill first, with any remaining amount moving towards repayment under the standard instalment rules. The new rules replace this default approach with an explicit election, so the treatment of each instalment is now a conscious decision rather than an automatic outcome.

In practical terms, companies must indicate on their corporation tax return (CT1) whether an instalment should be used to offset any tax liabilities or taken as cash. This gives both taxpayers and Revenue a clear, shared understanding of how the R&D credit will be processed, which should make the system more predictable and easier to administer on both sides.

Because the R&D tax credit rate and first‑year payment thresholds are increasing, instalments will often represent a more significant amount of money. That makes the choice between offset and refund an important part of cash‑flow and tax planning. Businesses should ensure that their elections line up with internal forecasts, funding needs, and group policies, rather than leaving the decision to the last minute at filing.

It’s also important that companies notify their accountants in good time of their intention to file an R&D tax credit claim and discuss how best to avail of the refund. In Ireland, the R&D tax credit election is made through the corporation tax return, which is submitted by the company’s accountant. Early communication ensures that the chosen treatment (offset or refund) is aligned with the company’s wider tax position and filed correctly.

If the fields completed on the CT1 are missing, unclear, or inconsistent with the rest of the claim, it can delay processing and may require amended returns or extra correspondence with Revenue. Building the instalment decision into the normal R&D claim process,  and coordinating early with your accountant,  helps avoid these issues and ensures that the benefit of the credit arrives when and how the business expects it to.

If you have any questions about R&D tax credits or Grant Funding please get in touch with ABGI Ireland. We are one of Ireland’s trusted and leading R&D consultancies, with a proven track record of supporting robust, compliant claims. We work alongside in-house teams and external accountants to ensure instalment elections are structured correctly and aligned with your wider tax and cash-flow strategy.