Merged R&D expenditure credit
The default for most UK companies of any size. A 20% above the line credit on qualifying spend, taxable, so worth roughly 15.0% to 16.2% net.
R&D tax credits UK
R&D tax credits, explained properly
What the schemes pay, which costs qualify, how grant funding interacts with a claim, and what HMRC now expects to see before it releases the money.
The two schemes
Enhanced R&D Intensive Support
For loss making SMEs where qualifying R&D is at least 30% of total expenditure. An 86% enhancement plus a 14.5% payable credit, paid in cash.
Rates and thresholds are set by HMRC and can change at a Budget. Confirm the rules for your accounting period, or size the claim with our calculator.
Which costs qualify
Staff costs
Gross pay, employer NIC and pension for people directly working on the R&D, plus a fair apportionment for those supervising or supporting it.
Externally provided workers
Agency or contracted staff working under your direction, restricted to UK based work under the current territorial rules.
Subcontracted R&D
Work you contract out where you carry the technical risk and intended the R&D. UK based subcontractors only under the current rules.
Consumables and utilities
Materials transformed or consumed in the R&D, plus a share of power, water and fuel used by the qualifying work.
Software, data and cloud
Licences, datasets and cloud compute used in the R&D, apportioned where the same tools also support business as usual.
Clinical trial volunteers
Payments to participants in qualifying clinical trials, which matters for most life science and medtech claims.
Grant funding and R&D tax credits
This is the single biggest misconception we correct. Under the merged scheme, grant funding no longer restricts a claim. The expenditure credit is calculated on qualifying expenditure regardless of how the project was funded, there is no need to split grant funded costs from the rest, and signing a grant offer letter does not downgrade your tax position on ongoing innovation. The only carve out is the de minimis state aid limit that applies to Northern Ireland registered companies claiming ERIS, which exists independently of whether you hold a grant.
How to claim
Identify the projects, not the products
A claim is built from projects that sought an advance in science or technology and faced uncertainty a competent professional could not readily resolve. Start from the hard problems, not the roadmap.
Set the technical boundary
Record where the uncertainty began and where it ended. Everything before and after, including routine build, testing and rollout, sits outside the claim.
Pull and apportion the costs
Map qualifying costs to each project with a method you can explain: timesheets, sprint records or a documented estimate from the technical lead.
Write the technical narrative
Baseline, uncertainty, advance and competent professional, in HMRC's own language. This is the part that decides whether a claim survives scrutiny.
File the additional information form
HMRC requires the additional information form before or alongside the CT600 return. Claims filed without it are rejected outright.
Common questions
What are R&D tax credits?
R&D tax credits are a UK corporation tax relief for companies resolving scientific or technological uncertainty. Under the merged scheme, most companies claim a 20 per cent above the line expenditure credit on qualifying R&D spend, which is taxable and therefore worth roughly 15 to 16 per cent net. Loss making R&D intensive SMEs may instead claim under ERIS.
How much are R&D tax credits worth?
The merged expenditure credit is 20% of qualifying spend before tax, which nets down to around 15.0% to 16.2% depending on your corporation tax rate. ERIS is worth materially more in cash to loss making SMEs where qualifying R&D is at least 30% of total expenditure.
Can you claim R&D tax credits on a grant funded project?
Yes. Under the merged scheme, grant funding is irrelevant to the claim: the expenditure credit is calculated on qualifying expenditure regardless of how the project was funded. The old subsidised expenditure restrictions have been abolished, so there is no need to split grant funded costs out of the claim. A separate de minimis state aid limit applies to Northern Ireland registered companies claiming ERIS.
Who can claim R&D tax credits?
Any UK company within the charge to corporation tax that carries out qualifying R&D. Sole traders and partnerships cannot claim. The work must seek an advance in a field of science or technology, so commercial novelty alone is not enough.
How far back can you claim?
You can normally claim for the two most recent completed accounting periods. First time claimants usually also need to notify HMRC in advance within six months of the period end, so check the notification deadline before assuming an older year is still open.
How long does HMRC take to pay?
HMRC aims to process most claims within about 40 working days, though enquiries and compliance checks extend that. A well evidenced technical report and a clean additional information form are the fastest route to payment.
Find out what your R&D is worth
Book a free 20-minute review. We will confirm the scheme, the qualifying costs and whether the claim is worth making.