The new R&D tax relief rates
The table below shows how R&D tax relief rates have changed in recent years. The merged scheme applies for accounting periods beginning on or after 1 April 2024.
SME R&D tax incentive | RDEC | Merged scheme | Enhanced R&D intensive support | |||
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Company type | Before 1 April 2023 | After 1 April 2023 | Before 1 April 2023 | From 1 April 2023 | From 1 April 2024 | From 1 April 2024 |
Loss-making SME | Up to 33.35% | Up to 18.6% | 10.5% | 15% | 16.2% | |
Profit-making SME | Up to 24.7% | Up to 21.5% | 10.5% | Up to 16.2% | Up to 16.2% | |
R&D intensive SME | Up to 27% | Up to 27% | ||||
Large company | 10.5% | Up to 16.2% | Up to 16.2% |
Our impact calculator provides an indicative guide to businesses looking to assess what the new rates will mean for their future R&D tax relief claims. However, it is no substitute for tailored advice from ForrestBrown’s expert team, so please do get in touch for a more detailed analysis.
How to calculate R&D for SMEs
For the purposes of R&D tax relief, SMEs are classified as having fewer than 500 staff and not more than either €100 million turnover or €86 million gross assets.
For profit-making SMEs, R&D relief reduces your Corporation Tax bill. The rate of relief is up to 21.5%.
If you’re a loss-making SME, you’ll typically receive R&D relief in the form of a cash credit because you don’t have a tax liability to offset. The rate of relief is 19%.
Loss-making SMEs that are R&D intensive (spending 30% or more of total business expenditure on R&D) are eligible for a higher rate of relief of 27%.
Read more on current R&D tax credit rates for SME incentives.
How to calculate R&D for RDEC
For accounting periods starting before 1st April 2024, the Research and Development Expenditure Credit (RDEC) is primarily for large companies. But the incentive is also for those SMEs who in some instances can’t use the SME R&D tax credit.
Your RDEC claim generates a taxable above-the-line credit of 20% of your identified R&D costs. As this is taxable it results in a net benefit of up to 16.2% after tax.
These costs can be offset against your tax bill or, if there is no tax payable, you could receive the net amount as cash.
Read more on R&D tax credit rates for RDEC.
Calculate the impact of R&D tax relief rates under the merged scheme
Our R&D tax relief calculator helps you assess the indicative impact of changes to rates of relief introduced for accounting periods beginning on or after 1 April 2024. So, the first accounting periods to fall under the merged scheme will be those that end on 31 March 2025.
1 Who are you
2 What is the financial position of your company
3 What is your estimated spend on R&D per year?
3 What is your estimated spend on R&D per year?
4 What is your estimated total business expenditure per year?
4 What is your estimated total business expenditure per year?
4 What is your estimated total business expenditure per year?
4 What is your estimated total business expenditure per year?
2 What is your estimated spend on R&D per year?
SME
Fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets.
Companies of all sizes come under a merged R&D tax relief scheme for accounting periods beginning on or after 1 April 2024, with the exception of loss-making SMEs whose qualifying R&D costs make up 30% or more of total business expenditure.
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Profit making
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£50,000 spend
Do you know what costs qualify for R&D tax relief? What costs qualify for R&D tax relief?
We estimate you could receive up to £ 7500 as a tax credit
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£250,000 spend
Do you know what costs qualify for R&D tax relief? Find out more
We estimate you could receive up to £ 37500 as a tax credit
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£500,000 spend
Do you know what costs qualify for R&D tax relief? How do you identify how much R&D each staff member does?
We estimate you could receive up to £ 75000 as a tax credit
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£1,000,000 spend
Do you know what costs qualify for R&D tax relief? How do you identify how much R&D each staff member does?
We estimate you could receive up to £ 150000 as a tax credit
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Loss making
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£50,000 spend
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£50,000 total expenditure
Do you know how much you can claim for your subcontractors? Can I claim R&D tax relief on subcontractors?
We estimate you could receive up to £ 13485 as a tax credit
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£50,000 spend
£100,000 total expenditure
Do you know what costs qualify for R&D tax relief? Find out more
We estimate you could receive up to £ 13485 as a tax credit
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£50,000 spend
£250,000 total expenditure
Do you know what costs qualify for R&D tax relief? What costs qualify for R&D tax relief?
We estimate you could receive up to £ 8100 as a tax credit
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£50,000 spend
£500,000 total expenditure
Do you know what costs qualify for R&D tax relief? How do you identify how much R&D each staff member does?
We estimate you could receive up to £ 8100 as a tax credit
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-
£250,000 spend
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£250,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 67425 as a tax credit
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£250,000 spend
£500,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 67425 as a tax credit
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£250,000 spend
£1,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 40500 as a tax credit
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£250,000 spend
£2,500,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 40500 as a tax credit
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-
£500,000 spend
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£500,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 134850 as a tax credit
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£500,000 spend
£1,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 134850 as a tax credit
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£500,000 spend
£2,500,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 81000 as a tax credit
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£500,000 spend
£5,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 81000 as a tax credit
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£1,000,000 spend
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£1,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 269700 as a tax credit
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£1,000,000 spend
£2,500,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 269700 as a tax credit
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£1,000,000 spend
£5,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 162000 as a tax credit
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£1,000,000 spend
£10,000,000 total expenditure
Get in touch to find out how to calculate your total business expenditure.
We estimate you could receive up to £ 162000 as a tax credit
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Large company
500 staff or more and either more than €100 million turnover or €86 million gross assets.
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£50,000 spend
Do you know what costs qualify for R&D tax relief? What costs qualify for R&D tax relief?
We estimate you could receive up to £ 7500 as a tax credit
Estimate based on 25% Corporation Tax rate.
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£250,000 spend
Do you know what costs qualify for R&D tax relief? Find out more
We estimate you could receive up to £ 37500 as a tax credit
Estimate based on 25% Corporation Tax rate.
-
£500,000 spend
Do you know what costs qualify for R&D tax relief? How do you identify how much R&D each staff member does?
We estimate you could receive up to £ 75000 as a tax credit
Estimate based on 25% Corporation Tax rate.
-
£1,000,000 spend
Do you know what costs qualify for R&D tax relief? How do you identify how much R&D each staff member does?
We estimate you could receive up to £ 150000 as a tax credit
Estimate based on 25% Corporation Tax rate.
Limitations of a tax credit calculator
Although it’s a useful indicator for businesses planning R&D investment, our calculator is no replacement for advice from our expert team. Get in touch below to find out more.
Discuss your claim with our expert team
Get in touch to arrange a claim review with our expert team
How can we help you?
To find out more about how R&D tax credits can benefit you business, get in touch with our team.
- Telephone
- 0117 926 9022
- hello@forrestbrown.co.uk