R&D Tax Credit Calculator
Optimise your R&D tax relief with an expert team that handles R&D claims for a living
Are you receiving everything you should from your R&D tax claim? We don’t just mean financially. Our fully rounded service gives you complete peace of mind. Whether you are submitting claims yourself, through an accountant or a different R&D tax provider, we are confident we can elevate your current experience.
Providing a full advisory service, we go beyond what our competitors offer. Visiting you in person is standard practice for us and we will keep you informed of all the latest developments from HMRC on the R&D landscape.
R&D tax is a complex field, and your claim is in safe hands with our expertise. Trust us with your submission and you’ll save lots of time – you won’t have to worry about filling in detailed forms or dealing with HMRC. We’ll take care of all the paperwork and you can spend your valuable time running your business.
How are R&D Tax Credits Calculated?
On April 1 2024, the R&D tax schemes changed. For accounting periods that began on or after that date, the Merged scheme replaced the separate schemes for SMEs and large companies, designed to improve and simplify the system.
It means SMEs and large companies are now grouped under the same umbrella with an R&D tax credit rate of 20%.
The only exception is for loss-making SMEs that are classed as R&D intensive, i.e. more than 30% of the company’s total expenditure is spent on research and development. They will receive a 27% tax credit.
For expenditure incurred prior to April 1 2024, the SME scheme and RDEC scheme still apply, and claims can be backdated two years. Hence these schemes will not become obsolete until April 2026.
How much in R&D Tax Credits can my business claim?
It depends on which category your business falls under. Let’s take a look at the different categories below so you can have an idea of the scale of your R&D activity and costs — and the factors that influence our R&D tax credit calculator results.
Your SME is profitable
Your SME is profitable
In addition to the tax relief your company’s eligible R&D expenditure generates as part of its normal operational costs, a further 86% can be deducted from the yearly profit. That means with an R&D tax credit incentive of up to 21.5%, if you spent £500,000 per year on R&D you could potentially claim back up to £107,500 as a tax refund or reduced tax liability.
Your SME is loss-making
Your SME is loss-making
A payable credit can be claimed by loss-making SMEs. With an R&D tax credit incentive of up to 18.6%, if a company spent £500,000 per year on R&D it could potentially claim back up to £93,000.
Your SME is loss-making, but is R&D ‘intensive’
Your SME is loss-making, but is R&D ‘intensive’
To be defined as R&D intensive constitutes at least 30% of a company’s total expenditure being spent on research and development. Businesses in this category are eligible for an R&D tax credit incentive of up to 27%, which means if you spent £500,000 per year on R&D you could potentially claim back up to £135,000.
In addition to the tax relief your company’s eligible R&D expenditure generates as part of its normal operational costs, a further 86% can be deducted from the yearly profit. That means with an R&D Tax Credit incentive of up to 21.5%, if you spent £500,000 per year on R&D you could potentially claim back up to £107,500 as a tax refund or reduced tax liability.
Read more on how the claims process works with large companies via our RDEC page.
SMEs vs large companies:
What’s changed?
| Feature | Pre-April 2024 | Post-April 2024 |
|---|---|---|
| SMEs | Could claim up to 33% (loss-making) | Now claim 20% taxable credit (net ~15%) |
| Large Companies | Used RDEC (13%–20%) | Same 20% taxable credit |
| Subsidised R&D | Penalised under SME scheme | No longer penalised |
| Overseas R&D | Some flexibility | Now restricted unless justified |
R&D tax relief example — Find out what your claims process could look like.
First step, our team will identify your qualifying R&D spend. Key areas typically include: direct staff costs, contractors and any outsourced R&D work costs, any consumables and raw materials you may have used, and software licences. We will also calculate how much time your company has spent on each of these key areas during the accounting period.
If you are in profit, we will boost your qualifying expenditure. SMEs for example can deduct up to 130% of their qualifying expenditure from their annual profits if they meet certain conditions.
Loss-making companies will have their qualifying expenditure examined and this information used to either offset future taxable profits or be handed over to HMRC in return for tax credit.
R&D Tax Credits Calculator —
General FAQs.
What qualifies for R&D tax credits?
Many companies able to claim back R&D tax relief are in manufacturing and engineering. But any business creating or developing new products or processes may be eligible, in a wide variety of sectors.
This question is answered in more detail in our ‘Who is eligible?’ guide
How am I impacted by the latest changes to R&D tax credit rates?
In the 2023 Autumn Statement, the government announced reforms to R&D tax credit relief that would come into effect from April 2024 and which were designed to simplify and improve the system. The latest budget in 2024 had no further impact, and it will be April 2025 before the first claims are made under the decisions made from the 2023 Autumn Statement.
For accounting periods that began on or after April 1 2024, the RDEC and SME schemes were merged into one, apart from loss-making SMEs that are R&D intensive – which means more than 30% of their total expenditure is incurred on research and development.
The figure of 30% is a reduction from the previous 40% and SMEs which cross that threshold in terms of their expenditure on research and development will qualify for the new SME intensive scheme.
An R&D tax credit rate of 20%, the same as for the discontinued RDEC scheme, applies to the merged scheme, while loss-making R&D intensive SMEs will receive a 27% tax credit. Use our R&D tax credit calculator to work out what this will mean for you.
To qualify as an SME, and therefore be eligible to be classed as R&D intensive, a company must have fewer than 500 staff and either a turnover of under 100 million euros or 86 million euros gross assets.
You will also need to consider whether the decision to carry out R&D activity sits within your company or elsewhere in the supply chain. Generally, companies will not be able to make a claim if R&D has been contracted to them.
How do you calculate the impact of R&D tax relief?
R&D tax credits are the subject of continual review by the government to ensure they are serving the purpose, and to best effect, for which they were designed.
In 2023, when the rates of relief were revised, the government said the R&D tax credits schemes were being reformed “to ensure public money is spent effectively and best supports innovation”. What this meant was that the reforms were intended to increase and encourage R&D activity, with the aim of generating private investment and a boost in economic growth.
Figures published by HMRC showed that both the SME and RDEC schemes were successful in promoting additional R&D expenditure.
Studies from the Treasury showed that for every £1 of support, the RDEC scheme incentivised £2.40–£2.70 of additional private R&D expenditure, and the SME scheme incentivised an additional £0.60–£1.28.
Another modification which has impacted the amount of R&D tax relief a company can claim centred upon which types of expenditure qualify for inclusion.
For instance, cloud computing and data acquisition costs (where they directly relate to R&D activity) have extended the scope of qualifying expenditure. Such costs are common in certain industries, e.g. within technology, media and telecommunications companies.
Also, the definition of R&D for tax reliefs has been expanded to include all mathematics, clarifying in particular that ‘pure maths’ can qualify.
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