Guidance

Work out your Research and Development tax relief

Find out how to work out your Research and Development (R&D) tax relief for your Corporation Tax Company Tax Return.

From:
HM Revenue & Customs
Published
31 October 2024

There may be other steps you must complete before you work out your Research and Development (R&D) tax relief. Check the steps you need to take to correctly claim R&D tax relief.

You need to work out your R&D tax relief so you can include details of this on your additional information form before you claim on your Company Tax Return. 

There are 4 different types of R&D tax relief, which one you use depends on when your accounting period began.

For accounting periods beginning before 1 April 2024 the schemes are:

  • R&D Expenditure Credit (RDEC)
  • small and medium-sized enterprise (SME) tax relief 

For accounting periods beginning on or after 1 April 2024 the schemes are:

  • the merged scheme
  • enhanced R&D intensive support (ERIS)

If you’re claiming R&D Expenditure Credit (RDEC)

Expenditure credit is a tax credit that can be claimed by large companies and some SMEs. Find out if you qualify for RDEC.  

Follow these steps to calculate the expenditure credit. 

  1. Work out the costs that relate to your R&D work — check what R&D costs you can claim.

  2. Add all costs together. 

  3. Multiply the figure by the expenditure credit rate to get the expenditure credit. 

Expenditure credit rates 

The expenditure credit rate on costs from: 

  • 1 April 2015 up to and including 31 December 2017 is 11% 

  • 1 January 2018 up to and including 31 March 2020 is 12% 

  • 1 April 2020 up to and including 31 March 2023 is 13% 

  • 1 April 2023 up to and including 31 March 2024 is 20% 

If you’re claiming small and medium-sized enterprise (SME) tax relief 

To find out if you qualify for SME tax relief, check the SME and intensity condition guidance. 

Follow these steps to calculate the relief.

  1. Work out the costs that relate to your R&D work — check what R&D costs you can claim. 

  2. Add all costs together — this is your qualifying expenditure.

  3. Multiply your qualifying expenditure by 86% — this is the additional R&D relief deduction amount.

  4. Multiply your qualifying expenditure by 186% — this is the enhanced expenditure amount.

If you’ve made a trading loss

You can choose to give up whichever of the following is lower in return for a payable tax credit, either the:

  • enhanced expenditure amount that you worked out at step 4

  • total trading loss after you’ve taken the additional R&D relief deduction that you worked out at step 3

The payable tax credit is:

  • 14.5% of the amount you’ve given up if your company meets the intensity condition
  • 10% of the amount you’ve given up if your company does not meet the intensity condition

To find out if you meet the intensity condition, check the SME and intensity condition guidance. 

The tax credit you claim cannot exceed the PAYE cap, unless you’re exempt from the cap. To find out what happens if your credit exceeds the PAYE cap, check the SME and intensity condition guidance.

If you’re claiming under the merged scheme

The merged scheme is a taxable expenditure credit that can be claimed by eligible trading companies. To find out if you qualify for the merged scheme, check the merged scheme and ERIS guidance.

Follow these steps to calculate the expenditure credit. 

  1. Work out the costs that relate to your R&D work — check what R&D costs you can claim.

  2. Add all costs together.

  3. Multiply the figure by 20% to get the expenditure credit amount. 

The expenditure credit amount you receive in the accounting period cannot exceed the PAYE cap, unless you’re exempt from the cap. To find out what happens if your credit exceeds the PAYE cap, check the merged scheme and ERIS guidance.

If you’re claiming enhanced R&D intensive support (ERIS)

The ERIS scheme is for loss-making R&D intensive SMEs with accounting periods beginning on or after 1 April 2024.

If you’re a loss-making R&D intensive SME, you can choose to claim under the merged scheme or the ERIS scheme. You cannot claim under both schemes for the same costs.

To find out if you qualify for the ERIS scheme, check the merged scheme and ERIS guidance.

  1. Work out the costs that relate to your R&D work — check what R&D costs you can claim.

  2. Add all costs together — this is your qualifying expenditure.

  3. Multiply your qualifying costs by 86% — this is the additional R&D relief deduction.

  4. Multiply your qualifying costs by 186% — this is the enhanced expenditure amount.

You can choose to give up whichever of the following is lower in return for a payable tax credit, either the:

  • enhanced expenditure amount that you worked out at step 4

  • total trading loss after you’ve taken the additional R&D relief deduction that you worked out at step 3

The payable tax credit is 14.5% of the amount you’ve given up. The tax credit you claim cannot exceed the PAYE cap, unless you’re exempt from the cap. To find out what happens if your credit exceeds the PAYE cap, check the merged scheme and ERIS guidance.

What you need to do next  

After you’ve worked out your R&D tax relief you must submit an additional information form before you claim.

Updates to this page

Published 31 October 2024

Sign up for emails or print this page

Contents

Related content