R&D tax relief was rebuilt for accounting periods beginning on or after 1 April 2024. The old SME and RDEC schemes were merged into one, with a separate, more generous route for loss-making companies that spend a large share of their money on research.
The merged scheme: a 20% credit that is taxable
Most claimants now use the merged R&D expenditure credit at 20% of qualifying spend. The detail nearly every calculator skips is that the credit is itself taxable — so at a 25% corporation tax rate, a 20% credit is worth about 15% net.
Budget on the net figure. A finance director who has been promised 20% and receives 15% will remember it, and it is entirely predictable.
Enhanced R&D Intensive Support
Loss-making SMEs whose qualifying R&D is at least 30% of total expenditure can claim under ERIS instead: an 86% additional deduction, plus a payable credit of 14.5% of the surrenderable loss. For a genuinely research-led company that is worth substantially more than the merged scheme.
The 30% intensity threshold is the gate, and it is measured including connected companies — which catches groups out.
Where claims actually go wrong
Not in the arithmetic. In what counts as qualifying expenditure, and in the evidence behind it. HMRC has tightened this area considerably: claims now need an additional information form submitted before the return, and enquiry activity has risen sharply.
If somebody offers to prepare a claim on a contingent fee with no questions about the technical uncertainty you were trying to resolve, that is a reason to be careful rather than pleased.
Common questions
Does my project actually count as R&D?
The test is whether you sought an advance in science or technology by resolving a scientific or technological uncertainty that a competent professional in the field could not readily deduce. Commercial novelty is not enough — a new product built entirely from known techniques generally does not qualify, while an unglamorous back-end problem nobody had a reliable answer to often does. It is worth describing the uncertainty in plain terms before you count any cost.
What can I include in qualifying spend?
Broadly staff costs for people directly working on the project, a proportion of supervisory and support time, some subcontractor and externally provided worker costs subject to restrictions, consumables used up in the process, software, and certain data and cloud computing costs. Rules on overseas expenditure tightened for accounting periods beginning on or after 1 April 2024, so work done abroad that used to qualify may no longer.
How long does a claim take to pay out?
HMRC's published aim is to deal with the majority of claims within 40 working days, though that is a target rather than a guarantee and processing has been slower during periods of high enquiry activity. Claims are also far more likely to be checked than they were a few years ago, so the useful preparation is the evidence file rather than the submission itself.