UK R&D Tax Relief estimate.
Net cash benefit
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Gross expenditure credit (20%)
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Your breakdown
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The merged scheme, in plain terms
For accounting periods starting on or after 1 April 2024, HMRC folded the old SME relief and the Research and Development Expenditure Credit into one Merged Scheme. There is now a single 20% expenditure credit on qualifying R&D spend, available to almost every company regardless of size. The credit is what accountants call an above the line credit: it appears as taxable income in your profit and loss account, which means the headline 20% is not the figure that reaches your bank. The credit itself is taxed at your corporation tax rate, so the genuine cash benefit is always lower than the gross number. This calculator does that second step for you, which is the part business owners most often get wrong when they read the headline rate and budget for the full 20%.
Tracing £200,000 of qualifying spend
Enter £200,000 of qualifying R&D expenditure against the main 25% corporation tax rate, which applies to companies with profits above £250,000. The calculator first applies the 20% expenditure credit to give a gross figure of £40,000, then reduces it by corporation tax at 25% because the credit is taxable, leaving £30,000 in your pocket. That is an effective recovery of 15% of what you spent.
If the same company paid the 19% small profits rate instead, the credit would be taxed more lightly and the net benefit would rise toward £32,400, an effective 16.2%. The chart shows how the cash you keep moves with your corporation tax rate while the gross credit stays fixed at £40,000.
What actually counts as qualifying spend
The most expensive mistakes happen at the boundary of what qualifies, not in the maths. To claim, the work must seek an advance in science or technology and resolve genuine scientific or technological uncertainty, not merely be new to your business. Staff costs, a portion of subcontractor and externally provided worker costs, software, consumables, and certain data and cloud computing costs can qualify. Routine commercial development, market research, and the cost of land or capital assets do not. Since 2023 HMRC has also required most claims to be supported by an Additional Information Form filed before the company tax return, and a great many claims now fail simply because that form was missed. This tool is built for finance directors and founders sizing a claim before they engage an adviser, and for sanity checking what a provider tells you the cash benefit will be.
The deadlines that quietly kill claims
The cash benefit this calculator shows is worth nothing if you miss the filing windows, and HMRC has tightened them sharply. For accounting periods beginning on or after 1 April 2023, a company that has not claimed R&D relief in the previous three years must submit a Claim Notification Form to HMRC within six months of the end of the accounting period, or it loses the right to claim for that year entirely. Separately, almost every claim now needs an Additional Information Form, detailing the projects and the breakdown of qualifying costs, filed before or at the same time as the company tax return. Miss the Additional Information Form and HMRC will simply remove the claim from your return. The underlying claim itself must reach HMRC within two years of the period end. These are hard deadlines, not guidelines, and a late notification is the most common way a perfectly valid claim is lost.
Questions founders ask
What is ERIS and could a loss maker get more than 20%?
Yes. Enhanced R&D Intensive Support is a parallel route for loss making SMEs whose qualifying R&D is at least 30% of total expenditure. It delivers a far more generous effective rate, up to around 27% of spend as a payable credit, which is why early stage deep tech companies should always check whether they meet the intensity test before defaulting to the merged scheme figure this tool produces.
Can a company that paid no corporation tax still get cash?
It can. Because the merged scheme credit is payable, a loss making company can receive a cash payment from HMRC after the credit passes through a set order of offsets, including a notional tax restriction and any group surrenders. The amount differs from the simple net figure shown here, so a profit making company is the cleaner case for this calculator. Loss makers should expect their realised cash to follow the formal RDEC payment steps rather than the single subtraction modelled above.
One judgement call from practice: do not inflate the claim to chase the credit. HMRC enquiry activity on R&D has risen sharply, and an aggressive claim that treats ordinary development as qualifying research invites a costly enquiry, repayment of the credit, and penalties. A smaller, well documented claim that survives scrutiny is worth far more than a large one that unravels.