R&D Tax Credit Calculator
This R&D tax credit calculator works out what a UK company can claim under the two schemes that replaced the old RDEC and SME reliefs for accounting periods beginning on or after 1 April 2024. The merged R&D expenditure credit is worth 20% of qualifying expenditure, but it is taxable as trading income, so £100,000 of qualifying spend produces a £20,000 gross credit and about £15,000net at the 25% Corporation Tax rate. A loss-making SME whose R&D is at least 30%of total expenditure can instead claim enhanced R&D intensive support, deducting an extra 86% of qualifying costs and surrendering the resulting loss for a payable credit of up to 14.5%. That is worth up to 26.97% of qualifying spend, and unlike the merged scheme credit it is not taxed.
Payable tax credit. Not liable to Corporation Tax.
How much R&D tax relief can you claim?
The scheme you fall into decides the rate, and the two schemes are not comparable on their headline numbers because only one of them is taxed.
| Scheme | Headline rate | Taxable | Net on £100,000 spend |
|---|---|---|---|
| Merged RDEC, 25% CT | 20% | Yes | £15,000 |
| Merged RDEC, 19% CT | 20% | Yes | £16,200 |
| ERIS, loss-making intensive SME | 14.5% | No | £26,970 |
The merged RDEC scheme
The merged scheme is the default. Any trading company chargeable to Corporation Tax with a project meeting HMRC's definition of R&D can claim it, whatever its size or profitability. The rate is 20% of qualifying expenditure.
The detail that catches people out is that this credit is taxable. HMRC treats it as trading income, so the cash value depends on your Corporation Tax rate. At the 25% main rate a 20% credit is worth 15% of spend. At the 19% small profits rate it is worth 16.2%. Different rates apply to ring-fenced oil, gas and mining trades, which this calculator does not cover.
Enhanced R&D intensive support
ERIS is narrower and more generous. To qualify a company must be all three of the following at once:
- An SME, as HMRC defines it
- Loss-making, meaning it makes a trading loss for tax purposes before the additional deduction is made
- R&D intensive, meaning relevant R&D expenditure is at least 30% of total expenditure, including connected companies
A qualifying company deducts an extra 86% of its qualifying costs on top of the 100% already in the accounts, giving a 186% total deduction. It can then surrender the resulting loss for a payable tax credit worth up to 14.5% of the surrenderable loss. Multiply those together and the ceiling is 1.86 times 14.5%, or 26.97% of qualifying spend.
You can also meet the intensity condition on a prior-year basis if you met it in your last 12-month accounting period and made a valid claim to SME relief or ERIS in that period on expenditure incurred on or after 1 April 2023.
The PAYE cap
Under either scheme the credit received in an accounting period cannot exceed the PAYE cap, unless the company is exempt. The cap is £20,000 plus 300% of the company's relevant PAYE and National Insurance contributions liabilities for that period.
The schemes behave differently when the cap bites. Merged scheme excess is carried forward as an expenditure credit you can claim in the next accounting period, so it is deferred rather than lost. Enter your PAYE and NIC figure in the calculator to see whether the cap affects you.
Worked examples
A profitable software company
Qualifying R&D spend of £100,000 against total expenditure of £600,000. R&D intensity is 16.7%, below the 30% threshold, and the company is profitable, so ERIS is unavailable on two counts. The merged scheme gives a £20,000 gross credit. Taxed at the 25% main rate, the net benefit is £15,000.
A loss-making research startup
Qualifying R&D spend of £100,000 against total expenditure of £120,000. Intensity is 83.3%, comfortably over the threshold, and the company is a loss-making SME. The extra 86% deduction is £86,000, giving a surrenderable loss of £186,000. At 14.5% that is a payable credit of £26,970, and it is not taxed.
The same startup, capped
If that company has minimal payroll, say £2,000 of PAYE and NIC, the cap is £20,000 plus £6,000, or £26,000. The £26,970 credit is restricted to £26,000.
What this calculator does not do
- It does not compute Marginal Relief for profits between £50,000 and £250,000. That depends on augmented profits, associated companies and the length of your accounting period. See HMRC's Marginal Relief guidance.
- It does not apply the separate rules for SMEs registered in Northern Ireland claiming ERIS, which are not subject to the overseas contractor and externally provided worker restrictions.
- It does not cover ring-fenced trades, which have their own expenditure credit rates.
- It does not decide whether your project meets HMRC's definition of R&D. That test comes first, and it is the one most claims fail.
Frequently asked questions
How much is an R&D tax credit worth?
Under the merged RDEC scheme the credit is 20% of qualifying R&D expenditure. Because that credit is taxable as trading income, the net benefit is about 15% of qualifying spend at the 25% Corporation Tax rate, or about 16.2% at the 19% small profits rate. A loss-making R&D intensive SME claiming enhanced R&D intensive support can receive up to 26.97% of qualifying spend as a payable credit that is not taxed.
What is the R&D intensity threshold?
A company meets the intensity condition if its relevant R&D expenditure is at least 30% of its total expenditure, including the expenditure of any connected companies. This applies to accounting periods beginning on or after 1 April 2024. Below 30%, enhanced R&D intensive support is not available and the merged RDEC scheme applies instead.
Can I claim both the merged RDEC scheme and ERIS?
No. You cannot claim under both schemes for the same expenditure. If you are eligible for enhanced R&D intensive support you may still choose to claim under the merged RDEC scheme instead, but you must pick one for any given cost.
What is the PAYE cap on R&D tax credits?
The credit you receive in an accounting period cannot exceed £20,000 plus 300% of the company's relevant PAYE and National Insurance contributions liabilities for that period, unless the company is exempt from the cap. Under the merged RDEC scheme, any excess is carried forward as an expenditure credit you can claim in the next accounting period.
Is the merged RDEC credit taxable?
Yes. HMRC classes the merged scheme R&D expenditure credit as trading income, so it is liable to Corporation Tax. The ERIS payable tax credit works differently and is not liable to tax.
Which companies can claim enhanced R&D intensive support?
Only a loss-making SME that also meets the 30% intensity condition. A company is loss-making if it makes a trading loss for tax purposes before the additional deduction is made. Profit-making SMEs and companies that are not R&D intensive claim under the merged RDEC scheme.
Sources
- HMRC: the merged R&D expenditure credit scheme and enhanced R&D intensive support
- CIRD82150: the intensity condition
- CIRD140000: the PAYE cap
- GOV.UK: Corporation Tax rates
Every rate used here is listed with its source on the methodology page. Rates were last verified on 2026-08-14. This is an estimate, not tax advice.