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Yes, your company may be able to claim UK R&D tax relief, but eligibility is decided through three separate tests: which rules apply to your accounting period, whether the project meets HMRC’s tax definition of R&D, and whether each item of expenditure satisfies the qualifying-cost rules. For accounting periods beginning on or after 1 April 2024, the merged R&D expenditure credit (RDEC) and the enhanced R&D intensive support (ERIS) regime replaced the former RDEC and SME schemes.
Start with the accounting-period start date. Then test the project, the company’s route into the relief, and every cost. Finally, complete HMRC’s notification, additional-information and Corporation Tax return requirements before the statutory deadline.
1. Start with the accounting-period start date
The first day of the company’s accounting period determines the legislation, rates and filing process. Do not combine rates or conditions from different periods in one claim.
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|---|---|---|
| On or after 1 April 2024 | Merged RDEC or ERIS (if the company qualifies) | Use the current merged-scheme rules and current claim forms. |
| Before 1 April 2024 | Earlier RDEC and SME frameworks | Apply the rules for that earlier period; do not use the post-1 April 2024 rates by default. |
If an accounting period of account is longer than 12 months, HMRC requires a separate R&D claim for each accounting period within it. Keep the period split consistent with the Corporation Tax return and the supporting project and cost schedules.
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2. Choose the possible relief route
For periods beginning on or after 1 April 2024, a qualifying company generally considers merged RDEC. A loss-making, R&D-intensive SME may instead qualify for ERIS. An ERIS-eligible company can choose merged RDEC, but the same expenditure cannot be claimed under both routes.
Merged R&D expenditure credit (RDEC)
- Designed generally for trading companies chargeable to Corporation Tax with a qualifying R&D project.
- The headline expenditure-credit rate is 20% of qualifying expenditure.
- The credit is taxable, so a 20% headline rate is not automatically a 20% net cash refund.
- A PAYE and National Insurance cap can restrict the payable amount. The general merged-scheme cap is £20,000 plus 300% of relevant PAYE and National Insurance liabilities, subject to exceptions.
Enhanced R&D intensive support (ERIS)
- Available only to companies that meet the SME conditions, are loss-making and satisfy the R&D-intensity test.
- Relevant R&D expenditure must generally be at least 30% of total expenditure, including connected companies, with detailed rules and alternative-period provisions.
- Qualifying costs receive an additional 86% deduction. Together with the normal 100% deduction, that produces 186% enhanced expenditure.
- A company may surrender eligible losses for a payable credit of up to 14.5% of the surrenderable loss, subject to the applicable cap and other conditions.
Being an SME does not by itself establish ERIS eligibility. Check the loss position, connected-company figures, intensity calculation and the relevant accounting period.
3. Apply the three eligibility gates
Gate 1: Which rules apply?
Record the exact start and end dates of the accounting period. A period beginning on 31 March 2024 and one beginning on 1 April 2024 can fall under different regimes. Earlier periods need their own historical analysis.
Gate 2: Does the project qualify as tax R&D?
HMRC’s definition is concerned with an advance in science or technology and the resolution of scientific or technological uncertainty. Assess each project on its actual work, not on its commercial label, industry or eventual success.
HMRC’s project assessment tool is a guide for understanding the criteria and preparing information; it is not blanket approval of every cost connected with a project. Save the answers, technical facts and records used to reach the conclusion.
Gate 3: Does the company and expenditure qualify?
After establishing project status, test the company’s route (merged RDEC or ERIS) and then test every cost. A qualifying project does not automatically make all related expenditure eligible. Category, relationship to the R&D, payment status, contractor relationship, location and accounting-period rules all matter.
4. Costs that may qualify
These are categories to investigate, not automatic entitlements. Allocate only the proportion that relates to qualifying R&D and retain a method for calculating that proportion.
Staff costs
Potentially qualifying staff expenditure can include salary and wages, bonuses, employer pension contributions, secondary Class 1 National Insurance contributions and staff training, where the employee’s work relates to qualifying R&D. Use contemporaneous timesheets, project allocations or another reasonable, consistently applied method to support the R&D proportion.
Externally provided workers
Payments for externally provided workers may qualify where the statutory conditions are met. Check the worker’s relationship with the company, the supplying entity, the work performed and any connected-party restrictions before including the amount.
Consumables and software
Consumables transformed or used up in the R&D process can qualify. Software used for qualifying R&D may also qualify where it falls within the relevant rules. Separate R&D use from production, administration and ordinary business use.
Data licences and cloud computing
For periods beginning on or after 1 April 2023, qualifying expenditure can include data-licence and cloud-computing costs, subject to the detailed conditions. Cloud examples include storage, hardware facilities, operating systems and software platforms. Apportion mixed-use contracts and retain invoices and usage evidence.
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Contracted-out R&D
Only the company that decides that R&D needs to be carried out can generally claim for contracted-out R&D. The company should be able to evidence its decision, planning and control of the work.
For an unconnected contractor, HMRC guidance describes a 65% limit on the contractor payment. For connected parties, the eligible amount uses the lower of the payment and the relevant contractor costs. Overseas work is restricted, although specific exceptions exist. Review the location, connection and decision-making facts for each contract rather than applying a blanket percentage.
Clinical-trial volunteer payments
Payments to clinical-trial volunteers can be a qualifying category when the statutory conditions are satisfied. Keep the trial records, payment evidence and link to the qualifying R&D activity.
5. Costs that normally cannot be claimed
HMRC examples of excluded expenditure include:
- Capital expenditure.
- Land.
- Patents and trademarks.
- Rent and business rates.
- Leasing costs.
- Production and distribution of goods or services.
General overheads and every expense near an R&D project are not automatically eligible. Classify each line by statutory category, establish the R&D connection and remove the non-qualifying share.
6. Payment and timing conditions
Under merged RDEC and ERIS, the expenditure generally must have been paid before the claim is made. HMRC’s internal guidance also contains a special timing rule for staff costs that remain unpaid more than nine months after the balance-sheet date. Reconcile the claim schedule to bank, payroll and supplier records and identify unpaid items before submission.
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7. How to calculate the relief
Merged RDEC calculation
- Total the qualifying expenditure for the accounting period.
- Multiply that amount by 20% to calculate the headline expenditure credit.
- Apply the tax treatment and any PAYE/National Insurance cap, then follow the statutory order for using the credit.
Illustration: £100,000 of qualifying expenditure produces a £20,000 headline credit before tax treatment and any cap. It should not be described as a guaranteed £20,000 cash payment because the credit is taxable and the cap and other statutory steps may reduce or defer the benefit.
ERIS calculation
- Identify qualifying expenditure and apply the additional 86% deduction.
- Combine that additional deduction with the underlying 100% deduction to obtain 186% enhanced expenditure.
- Calculate the trading loss available for surrender.
- Limit the surrenderable amount to the lower of the enhanced expenditure and the relevant trading loss.
- Apply the payable-credit rate of up to 14.5% to the surrenderable loss, subject to the cap and other conditions.
Illustration: £100,000 of qualifying expenditure creates £86,000 of additional deduction and £186,000 of total enhanced expenditure. The payable credit is not automatically 14.5% of £186,000: the surrenderable loss limitation and other ERIS conditions must be applied first.
A 10% credit sometimes appears in HMRC’s legacy SME calculation material for a loss-making SME that does not meet the ERIS intensity condition. That figure belongs to the relevant earlier calculation and must not be presented as the standard ERIS rate for periods beginning on or after 1 April 2024.
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Step 1: Map the accounting period
Write down the start date, end date and whether the period exceeds 12 months. Select the historical or post-1 April 2024 rules that match those dates.
Step 2: Check claim notification
Some companies must notify HMRC in advance of an R&D claim. HMRC guidance describes a notification period ending six months after the end of the relevant period of account, with exceptions including certain companies with a qualifying recent claim history. Check the current facts rather than assuming that a previous claim removes the requirement.
Step 3: Document each project
For every project, record the baseline capability, the advance sought, the technological uncertainty, the competent professionals involved, the work undertaken and the point at which the uncertainty was resolved or remains unresolved. Retain the project-tool answers and supporting records.
Step 4: Build the cost schedule
Extract costs from the accounting and payroll systems, allocate them to projects, apply the statutory categories and remove excluded or unsupported amounts. Check payment status, contractor terms, connected-party relationships, overseas activity and mixed-use apportionments.
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Step 5: Complete the additional-information form
HMRC requires additional information for an R&D claim. Prepare the project descriptions, cost breakdown, agent or adviser details where applicable, and the responsible company contact before submitting the claim.
Step 6: File the Corporation Tax claim
Enter the claim in the relevant Company Tax Return fields and supplementary forms. The additional-information submission must be made before the claim. Missing a required notification or information step can make the claim invalid.
Step 7: Meet the statutory deadline
| Period of account | Claim deadline |
|---|---|
| 18 months or less | Generally 24 months from the final day of the period. |
| More than 18 months | Generally 42 months from the first day of the period. |
These deadlines are measured from the period dates, not from the date the accounts are signed or the date the project ended.
9. Evidence to retain
- Board, project-management or technical records showing why the work was undertaken.
- Descriptions of the scientific or technological advance and uncertainties.
- Timesheets, payroll reports and staff-apportionment calculations.
- Invoices, contracts, payment records and cloud or data-licence usage evidence.
- Contractor decision-making, planning, connection and location evidence.
- Calculations supporting the 30% ERIS intensity test, including connected companies.
- Copies of the notification, additional-information form and submitted Corporation Tax return.
10. Common failure points and fixes
Using the wrong scheme year
Problem: Applying the 20%, 86% or 14.5% figures to a period that began before 1 April 2024.
Fix: Rebuild the analysis from the accounting-period start date and use the framework in force for that period.
Claiming every project cost
Problem: Treating a qualifying project as approval for all related spending.
Fix: Apply a category-by-category test and document the R&D proportion.
Assuming an SME automatically gets ERIS
Problem: Ignoring the loss-making and 30% intensity requirements.
Fix: Include connected-company expenditure and test the detailed intensity rules before choosing ERIS.
Including contractor work without decision evidence
Problem: Claiming an invoice where the company did not decide that R&D was required, or where the contractor and overseas rules are not met.
Fix: Preserve the decision, statement of work, technical supervision, connection status, location and payment evidence.
Submitting late or without required information
Problem: Missing notification, additional-information or statutory-deadline requirements.
Fix: Put the six-month notification window, the additional-information submission and the 24- or 42-month claim deadline on a compliance timetable.
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| Decision point | Merged RDEC | ERIS |
|---|---|---|
| Company profile | Generally a trading company chargeable to Corporation Tax with qualifying R&D. | Loss-making SME meeting the R&D-intensity and other conditions. |
| Headline mechanism | 20% expenditure credit, taxable. | Additional 86% deduction and up to 14.5% payable credit on eligible surrendered loss. |
| Intensity test | No ERIS intensity test. | Generally at least 30% relevant R&D expenditure, including connected companies. |
| PAYE cap | General cap of £20,000 plus 300% of relevant PAYE and National Insurance liabilities, subject to exceptions. | Cap and surrender rules apply; calculate from the company’s detailed facts. |
| Choice | An ERIS-eligible company may choose this route. | Cannot be claimed on the same expenditure as merged RDEC. |
The better route depends on the company’s losses, expenditure mix, connected-company position, payroll liabilities, contractor and overseas facts, and cash-flow objectives. Calculate both where the law permits a choice; do not select a route from the headline percentage alone.
12. When specialist advice is sensible
Consider qualified Corporation Tax or R&D-claim advice when projects involve substantial contracted-out work, overseas activity, connected companies, mixed-use cloud and data contracts, large payroll caps, a first claim, or an accounting period crossing the 1 April 2024 transition. Any adviser should be able to explain the technical basis for each project, the cost apportionment and the filing obligations rather than relying on a percentage of total expenditure.
13. Official guidance to check before filing
HM Revenue & Customs guidance updated 8 January 2026 states the merged RDEC headline rate and ERIS intensity threshold. HMRC calculation guidance accessed 13 October 2026 covers the 86% additional deduction and 14.5% payable-credit rate. HMRC claim guidance updated 3 October 2025 describes the 24-month and 42-month deadlines. Check the current HMRC pages and forms on the day of filing because rates, definitions, caps and notification conditions can change.
Frequently Asked Questions
Can a company claim both merged RDEC and ERIS?
An ERIS-eligible company may choose merged RDEC, but it cannot claim both regimes on the same expenditure.
Does a qualifying R&D project make all its costs eligible?
No. Each cost must separately satisfy the statutory category, R&D connection, payment, contractor, location and accounting-period conditions.
Is the 20% RDEC rate a 20% cash refund?
No. The credit is taxable and may be limited by the PAYE and National Insurance cap and the statutory ordering rules.
What is the ERIS 30% test?
For eligible periods, relevant R&D expenditure generally must be at least 30% of total expenditure, including connected companies, subject to detailed and alternative-period rules.
What happens if the company’s accounting period is longer than 12 months?
HMRC requires a separate R&D claim for each accounting period within the longer period of account.
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