R&D Tax Credit Calculator
How are R&D Tax Credits Calculated?
On 1 April 2024, the R&D tax schemes were simplified. The merged scheme replaced the separate SME and large company schemes, unifying them under a single R&D Tax Credit rate of 20%. This means both SMEs and large companies now fall under the same umbrella with the same credit rate.
The only exception is for loss-making SMEs that are classed as R&D intensive – where over 30% of total expenditure is spent on research and development. These companies can receive a 27% Tax Credit.
Expenditure incurred before 1 April 2024 is still eligible under the previous SME and RDEC schemes, and claims can be backdated up to two years. These older schemes will remain active until April 2026.
You can use our R&D Tax relief calculator to quickly estimate how much you may be entitled to under the merged scheme. For a detailed explanation on how the merged scheme works and how to calculate your claim, check out our blog: How to calculate R&D Tax Credit under the merged scheme.
Get clarity and confidence in your R&D Tax Claim
Many businesses are unsure whether their R&D claims fully and accurately reflect their qualifying activity. Our R&D Tax Credit calculator is a great starting point to estimate how much you could be entitled to.
Once you’ve used our calculator, our expert team is ready to support you through every step of the process. We go beyond basic calculations to give you clarity and confidence. We’ll even visit you in person, keeping you updated on any changes HMRC makes to the R&D landscape, so you never miss an opportunity.
R&D tax can be complex, but it doesn’t have to feel that way. Our multi-disciplinary team of tax, finance and technical specialists supports you from initial assessment through to HMRC submission and response – ensuring every claim is robust and well-evidenced.
How much in R&D Tax Credits can my business claim?
It depends on which category your business falls into. Let’s take a look at the main categories below so you get a clear picture of your R&D activity, typical costs, and the factors that influence our R&D Tax Credit calculator results.
If your work involves software development or digital products, our Software & IT R&D guide shows how claims are assessed in your sector.
Your SME is profitable
Your SME is profitable
Profit-making SMEs can claim R&D tax relief on their eligible expenditure, plus a further 86% of qualifying costs can be deducted from annual profits. With a credit rate of up to 21.5%, £500,000 spent on R&D could potentially return up to £107,500.
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’
Some loss-making SMEs qualify as R&D intensive, meaning at least 30% of total expenditure is spent on research and development. Businesses in this category are eligible for a 27% Tax Credit, so £500,000 spent on R&D could potentially return up to £135,000.
Learn more about how the claims process works for large companies on our RDEC Tax Credit Scheme 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 — see how your claim could work
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
- Consumables and raw materials
- Software licences
We’ll also calculate how much time your company has spent on each of these areas during the accounting period. Using our R&D Tax Credit calculator, you can estimate the potential value of these costs for your claim.
If you’re in profit, we’ll boost your qualifying expenditure – for example, SMEs can deduct up to 130% of their qualifying expenditure from annual profits if they meet certain conditions. Learn more about the conditions that apply here.
For loss-making companies, we’ll assess qualifying expenditure and use it to either offset future taxable profits or claim a tax credit from HMRC.
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.
We cover this in more detail in our R&D eligibility guide, as well as in our research and development Tax Credit calculator, which can give you a quick indication of potential qualifying spend.
How am I impacted by the latest changes to R&D tax credit rates?
The 2023 Autumn Statement introduced reforms that took effect from April 2024, designed to simplify and improve the system. SME and RDEC schemes are now merged, except for loss-making SMEs that are R&D intensive – meaning more than 30% of their total expenditure is spent on research and development.
Under the merged scheme, the standard R&D Tax Credit is 20%, while loss-making R&D intensive SMEs can receive 27%.
You can use our R&D Tax Credit calculator to quickly see how these changes might affect your claim and understand what your business could be eligible for.
To make sure you don’t miss the window for claiming under new rules, our R&D claim deadline guide explains how long you have to submit.
How do you calculate the impact of R&D tax relief?
R&D Tax Credits are regularly reviewed by the government to ensure they continue to encourage innovation effectively, which is exactly what they were designed for.
When relief rates were revised, the government confirmed the goal was to drive more private R&D investment, and the data shows the schemes work.
Studies from the Treasury found that for every £1 of support:
- The RDEC scheme incentivised £2.40-£2.70 of additional private R&D spend
- The SME scheme incentivised £0.60-1.28
The impact of R&D tax relief on your business depends on factors like your company type, profitability, and whether you qualify as an R&D intensive SME.
Using our R&D tax relief calculator, you can quickly gauge how much your business could claim and understand how it might affect your tax position.
Is the R&D Tax Credit calculator 100% accurate?
Our R&D calculator provides a high-level estimate based on current legislation. Final claim values depend on detailed technical and financial review, which is why our team can provide tailored support to ensure that everything is accounted for and submitted correctly to HMRC.
How does the R&D Tax Credit calculator work for different business types?
Our research and development tax credit calculator works for businesses of all sizes, whether you’re a small SME or a large corporation. The calculator considers the specific relief rates and criteria for each business type, providing you with an accurate estimate based on your R&D spend.
For small businesses (SMEs):
- The calculator applies the SME scheme (with enhanced tax relief), estimating the potential R&D credit or deductions
- If your SME is profitable, the tool will estimate the 130% deduction on your R&D spend from annual profits
- If your SME is loss-making, it will calculate a payable credit to offset losses or generate cash flow
- For R&D-intensive SMEs, the calculator will apply the 27% tax credit rate, helping you get the maximum relief
For large businesses:
- The calculator works for larger companies under the RDEC scheme, estimating the tax credit available based on eligible R&D expenditure
- It applies a 20% rate for eligible large businesses, estimating the cash relief you could potentially claim
- The calculator will also help determine whether your business qualifies under the RDEC scheme if you’ve already claimed previously
Ready to discuss your unclaimed R&D Tax Credits?
Complete the form to request a call from one of our consultants or click here to send us a message.