Overview
This guide provides detailed information on R&D tax relief eligibility under the UK Merged RDEC Scheme. The rules changed significantly in April 2024 — the old SME scheme and large-company RDEC were replaced by a single unified system that applies to all companies.
If your business is involved in technical innovation — developing new products, processes, or software — there is a meaningful chance you qualify for R&D tax relief, even if you have not previously considered it.
Qualifying activities
Qualifying R&D must involve resolving genuine technological uncertainty. This means working on problems where the solution is not readily deducible from existing knowledge — where experimentation, iteration, and the risk of failure are genuine features of the work.
Common qualifying activities include:
- Developing new software systems, algorithms, or architectures where the approach is genuinely uncertain
- Creating new materials, products, or processes with novel technical characteristics
- Adapting or improving existing technology in ways that require resolving technical uncertainty
- Systematic investigation and experimentation to advance technical knowledge
Qualifying costs
Under the Merged Scheme, you can claim relief on:
- Staffing costs for employees directly engaged in R&D (salary, NIC, pension)
- Subcontractor payments for qualifying R&D (subject to the 65% restriction for unconnected parties)
- Consumables used or transformed in the R&D process
- Software used directly in qualifying R&D
- Data licences and cloud computing costs for qualifying R&D
Effective relief rates
Under the Merged RDEC Scheme, most companies receive an effective benefit of 15–16.2% of qualifying spend. Loss-making SMEs that spend at least 30% of their total expenditure on qualifying R&D may qualify for the Enhanced R&D Intensive Support (ERIS) scheme, which provides up to 27% effective relief.
Use our free eligibility grader to get a personalised estimate of your potential claim value and an audit risk rating based on your specific business profile.
How to claim
Claims are made through your company's corporation tax return (CT600), alongside an Additional Information Form (AIF) that must be submitted to HMRC before or alongside the CT return. Claims must be made within two years of the end of the relevant accounting period.
Given increased HMRC scrutiny since 2022, specialist adviser support significantly reduces audit risk and typically results in more comprehensive claims. Most specialist advisers operate on a no-win-no-fee basis.