R&D Tax Relief Estimator (Merged Scheme, 2026/27).

From 1 April 2024, the previous SME and RDEC schemes were merged into a single scheme with a 20% above-the-line (ATL) tax credit. The ATL credit appears as income in the profit and loss account, reducing the company's CT liability. For profitable companies, the net benefit after CT equals the full gross credit. The scheme applies to all company sizes with the same rates.

Qualifying R&D costs include staff costs (salaries, employer NI, pension contributions), subcontracted R&D (65% of the subcontract cost), externally provided workers (65%), consumables used in R&D, data and cloud computing costs, and some software costs. Capital expenditure is not eligible, but R&D-related revenue expenditure generally is.

A company is R&D-intensive if at least 30% of its total expenditure is qualifying R&D spend. Loss-making R&D-intensive companies can claim an enhanced 27% credit rate under the RDII (R&D Intensive Incentive) scheme, compared to the standard 20%. This is particularly valuable for early-stage companies with significant R&D investment.

R&D relief is claimed through the company tax return (CT600) with supporting documentation in an Additional Information Form (AIF) submitted to HMRC before or alongside the return. Claims must be made within 2 years of the end of the accounting period. HMRC processes most claims within 40 working days, though complex claims may take longer.

Yes, significantly. The merged scheme replaced both SME R&D Relief and RDEC from 1 April 2024. Before the merger, SMEs could claim a 186% deduction (or 10% payable credit if loss-making), while larger companies used RDEC at 20%. The merged scheme at 20% is less generous for SMEs but simpler. HMRC has also increased scrutiny — claims must now include detailed technical narratives.