R&D tax relief under the merged scheme: what it is worth, and how to claim
Since April 2024, most companies claim research and development relief through a single scheme. Loss-making, research-intensive companies get more. A clear guide to both.
R&D relief rewards companies that try to resolve scientific or technological uncertainty: building something that a competent professional could not readily work out how to do. Writing ordinary software, or adapting a product in a known way, usually does not qualify. Solving a real technical problem, whether or not it succeeds, often does.
The merged scheme
For accounting periods beginning on or after 1 April 2024, the R&D expenditure credit is 20% of qualifying spending. The credit is taxable, so a company paying corporation tax at 25% keeps about 15p for each pound of qualifying cost. Payable credits are capped at £20,000 plus 300% of the company’s PAYE and National Insurance bill.
Enhanced support for R&D-intensive companies
A loss-making SME whose relevant R&D spending is at least 30% of its total spending can claim enhanced R&D intensive support instead. It deducts an extra 86% of qualifying costs, 186% in total, and can surrender losses for a payable credit worth up to 14.5% of the surrendered loss.
Which route
- Any size of company
- Credit of 20% of qualifying costs
- Credit is taxable
- Payable credit subject to a PAYE cap
- Loss-making SMEs only
- R&D at least 30% of total spending
- Extra 86% deduction
- Payable credit up to 14.5% of losses
Claiming well
- Keep a project log as you go: the problem, the uncertainty, what you tried.
- Track staff time on R&D monthly, not from memory at the year end.
- Check whether you must notify HMRC in advance: the Claim Notification Form is removed from 1 April 2027.
- Expect questions: HMRC reviews many claims, and good records make them short.
Sources
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This insight is general information, not advice for your circumstances. Talk to us before acting on it.