UK R&D Tax Credit & Relief Calculator

The UK's R&D tax relief landscape changed significantly from accounting periods beginning on or after 1 April 2024. HMRC merged the previous SME R&D relief and the Research and Development Expenditure Credit (RDEC) into a single merged scheme. Most companies now claim an above-the-line credit of 20% on qualifying R&D expenditure — meaning the credit is recognised in the profit and loss account before tax, improving headline profitability ratios.

One significant carve-out exists for R&D-intensive SMEs. If a company qualifies as an SME (broadly, fewer than 500 staff and either turnover under €100m or balance sheet under €86m) and its qualifying R&D expenditure represents 30% or more of its total expenditure, it qualifies for the Enhanced R&D Intensive Support (ERIS) scheme at a 27% credit rate.

The merged scheme credit is taxable: for a profitable company paying corporation tax at 25%, a 20% gross credit yields a net benefit of 15% of R&D spend. For loss-making companies, HMRC will repay the credit after withholding the equivalent corporation tax amount. Qualifying expenditure includes staff costs, subcontractor costs (subject to restrictions), consumables, and certain software costs.