What changed with the merged R&D scheme?

For accounting periods starting on or after 1 April 2024, the old separate SME and RDEC schemes were merged into a single RDEC-style scheme giving a 20% above-the-line taxable credit. After 25% corporation tax this is worth roughly 15% net of qualifying spend.

What is ERIS and who qualifies?

Enhanced R&D Intensive Support is for loss-making SMEs whose qualifying R&D is at least 30% of total expenditure. It gives an 86% additional deduction on qualifying spend and a 14.5% payable tax credit on the surrendered loss, worth up to about 27p per pound.

How is the merged-scheme net benefit calculated?

The 20% credit is itself taxable, so the net benefit depends on your CT rate. A profitable company at 25% keeps 15% of qualifying spend; a loss maker may keep a higher effective rate because a notional lower CT rate is applied to the credit.

Is the credit taxable income?

Yes, under the merged RDEC scheme the 20% credit is brought into your taxable profit, which is why the headline 20% reduces to around 15% after corporation tax. ERIS works differently as an enhanced deduction plus a payable credit.

What expenditure qualifies for R&D relief?

Qualifying costs include staff, externally provided workers, subcontractors (subject to rules), consumables, software, and data and cloud computing used directly in resolving scientific or technological uncertainty. Routine work and aesthetic changes do not qualify.

UK R&D SME Tax Relief Calculator

UK R&D tax relief was reformed for accounting periods starting on or after 1 April 2024. Most companies now use the merged RDEC scheme, while loss-making R&D-intensive SMEs can claim the more generous ERIS scheme. This calculator estimates the credit and net benefit under each.

How it works

Under the merged RDEC scheme the credit is 20% of qualifying spend, given above-the-line and itself taxable, so the net benefit after corporation tax is roughly 15%:

merged_credit = 0.20 × qualifying_spend
net_benefit   = merged_credit × (1 − CT_rate)

Under ERIS, a loss-making SME with R&D at or above 30% of total expenditure adds an 86% enhanced deduction to its loss and surrenders that loss for a 14.5% payable credit:

enhanced_deduction = qualifying_spend × (1 + 0.86)
payable_credit     = surrendered_loss × 0.145

Tips and notes

Use the merged scheme unless you are a loss-making SME spending at least 30% of total costs on R&D, in which case ERIS usually pays more cash. The merged-scheme credit is taxable, so its net value depends on your corporation-tax position — a profit maker at 25% retains about 15p per pound, while loss makers may retain more. ERIS surrenders losses for cash, so it only helps if you are loss-making. This is an estimate; the exact treatment of subcontractor costs, overseas spend restrictions, and the PAYE/NIC cap should be checked with an R&D specialist.