What could R&D tax relief be worth to my company?

A rough estimate of what a year of qualifying research and development costs could be worth under the merged scheme and, for loss-making R&D intensive companies, enhanced R&D intensive support. For planning only: it is not a claim, and HMRC decides what qualifies.

Last checked: 28 October 2026Worked out in your browser, nothing stored

For accounting periods starting on or after 1 April 2024, a company can claim R&D tax relief in one of two ways.

The merged scheme gives a credit of 20% of qualifying costs. The credit is taxed, so after tax it is worth about 15% of the costs to a company paying the main rate of Corporation Tax, and about 16.2% to a company paying the small profits rate or making a loss, which can be paid the credit in cash.
Enhanced R&D intensive support (ERIS) is only for loss-making small and medium-sized companies that spend at least 30% of their total spending on R&D. It adds an extra deduction of 86% of the costs to the loss, and the company can give up the loss for a cash credit of 14.5% of it.

This page puts both side by side for the figures you enter. It is an estimate, not a claim. It assumes your project already meets HMRC's definition of R&D, a 12-month accounting period, a UK company that is not in a ring fence trade, and costs that are all in the UK. Whether work counts as R&D, and which costs qualify, depends on detailed rules: HMRC checks claims closely and can reject or reduce them.

Staff costs on R&D

The R&D share of pay, employer's National Insurance and pensions

Materials, software, data and cloud

Used directly in the R&D

Paid to subcontractors

Unconnected, for R&D: counted at 65%

Paid for agency workers

Unconnected, on R&D: counted at 65%

Before R&D relief, the company makes

Profit, paying the main rateProfits over £50,000: the credit is taxed at 25% (or a little more with marginal relief)Profit of £50,000 or lessSmall profits rate: the credit is taxed at 19%A lossA trading loss for tax, before R&D relief

Trading loss before R&D relief

For tax, with the R&D costs already deducted

Total spending in the year

From the accounts, for the 30% test

Small or medium-sized for R&D relief?

Yes: fewer than 500 staff, and turnover up to €100m or assets up to €86mNo

PAYE and National Insurance in the year

What the company owes HMRC for its staff, for the cap

Exempt from the cap?

Yes, it meets HMRC's exemptionNo, or not sure

Qualifying costs

£156,000

Your costs, contractors at 65%

Merged scheme

£25,272

Paid in cash, after notional tax

ERIS

£32,503

Paid in cash, for giving up a loss

R&D intensity

39%

ERIS needs 30% or more

The merged scheme

Credit: 20% of qualifying costs: £31,200
Less tax on it at 19%: − £5,928
Worth after tax: £25,272
Paid in cash now: £25,272

Enhanced R&D intensive support (ERIS)

Extra deduction: 86% of qualifying costs: £134,160
Loss after the extra deduction: £224,160
Loss you can give up (at most 186% of costs): £224,160
Credit: 14.5% of that loss: £32,503
Loss given up for it: £224,160

On these figures ERIS pays £7,231 more in cash now, but uses up £224,160 of losses that could otherwise cut tax in a later profitable year. You claim one or the other for the same costs, not both.

The cap on cash from HMRC: £125,000 (£20,000 plus 300% of PAYE and National Insurance).

An estimate for planning, not a claim. HMRC decides what counts as R&D and which costs qualify.

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Worked example: A loss-making software company

A made-up example. £120,000 of staff time on R&D, £10,000 of cloud computing and software, and £40,000 paid to an unconnected developer. A trading loss of £90,000 before R&D relief, out of £400,000 of total spending, and £35,000 of PAYE and National Insurance in the year.

Qualifying costs: £130,000 plus 65% of £40,000: £156,000
Merged scheme credit: 20% of £156,000: £31,200
After notional tax at 19%: £25,272
R&D intensity: £156,000 of £400,000 spent: 39%
ERIS loss: £90,000 plus 86% of £156,000: £224,160
ERIS credit: 14.5% of £224,160: £32,503

Both are below the cap of £125,000. ERIS pays £7,231 more in cash now, and uses up £224,160 of losses; the merged scheme pays less now and leaves the loss to use later.

Worth knowing

A project counts as R&D only if it seeks an advance in a field of science or technology, by resolving scientific or technological uncertainty. Routine work, or work that only looks new to your company, does not count. Read HMRC's guidance before you count any costs.
Payments to a subcontractor or agency that is not connected to your company count at 65%. Connected companies follow different rules, and most work done overseas cannot be claimed. This page assumes everything is in the UK and unconnected.
The cash a company can get back is capped at £20,000 plus 300% of its PAYE and National Insurance for the period, unless it meets an exemption: broadly, its own employees create or manage the intellectual property, and no more than 15% of its qualifying costs go to connected subcontractors or agency workers. Under the merged scheme anything over the cap carries forward to the next period. Under ERIS a claim over the cap is not valid, so the most to claim is the cap.
The 30% test for ERIS counts the spending of connected companies too, and it compares the R&D costs that could be claimed with the total spending in your accounts. This page uses your qualifying costs as an estimate. You can also use ERIS in a year below 30% if you met the test in your last 12-month accounting period and made a valid claim for it.
Giving up a loss for an ERIS credit means that loss can no longer cut your tax in a later profitable year. Which way suits your company depends on its plans, which this page cannot know: an accountant can work it through.
Before you claim, you must send HMRC additional information about the claim. If it is your first claim, or your last was more than 3 years earlier, you must also send a claim notification within 6 months of the end of the period of account, or the claim will not be valid. The Budget on 28 October 2026 said the claim notification will be removed from 1 April 2027; until that becomes law, the deadline still applies.
Some advisers charge a share of the claim. Ask how the fee is worked out, and what happens if HMRC reduces the claim, before you sign anything.

Routes this works for

Research and development (R&D) tax relief

Sources

HM Treasury: Budget 2026 (28 October 2026) · checked 28 October 2026
GOV.UK: Research and Development (R&D) tax relief: the merged R&D expenditure credit scheme and enhanced R&D intensive support · checked 21 October 2026
HMRC manual CIRD112100: new RDEC payment steps (notional tax at the main or small profits rate) · checked 21 October 2026
HMRC manual CIRD115000: new RDEC rates · checked 21 October 2026
HMRC manual CIRD122000: ERIS calculation · checked 21 October 2026
HMRC manual CIRD137000: externally provided workers · checked 21 October 2026
HMRC manual CIRD138000: contractor payments · checked 21 October 2026
HMRC manual CIRD140000: the PAYE cap and its exemption · checked 21 October 2026
HMRC manual CIRD91900: SME thresholds for R&D relief · checked 21 October 2026
GOV.UK: Corporation Tax rates and allowances · checked 21 October 2026
GOV.UK: Check if you can claim Research and Development (R&D) tax relief · checked 21 October 2026
GOV.UK: Tell HMRC you want to claim Research and Development (R&D) tax relief · checked 21 October 2026

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