1. R&D tax credits explained
  2. R&D Tax Credit Calculator. How How To Calculate Your R&D Claim

How to calculate R&D tax credits

How do rate changes affect my R&D tax relief claim for expenditure from 1 April 2023?

In his Autumn Statement in November 2023, the Chancellor confirmed the introduction of a single scheme for R&D tax relief for accounting periods from 1 April 2024. A number of other reforms were announced, including changes to threshold for R&D-intensive SMEs. You can read more details in our article Autumn Statement 2023: what innovative businesses need to know.

This built on announcements made in the Autumn Statement in November 2022, when the Chancellor announced a ‘rebalancing’ of the rates for the SME and RDEC schemes. This can now be viewed as a first step towards merging the two.

An additional enhanced rate of relief for R&D intensive loss-making SMEs was subsequently announced in the Spring Budget in March 2023. This means that despite talk of a single scheme, two separate incentives will remain in place. The threshold for companies to qualify as R&D intensive was lowered in Autumn Statement 2023 to bring more businesses into the enhanced rate.

All of which can make working out which of the rates below applies to your R&D tax relief more challenging.

Your business

Company size

Loss-making SME >

Profit-making SME >

R&D intensive SME*>

Large company >

Until 31 March 2024

SME R&D tax incentive

Before 1 April 2023

Up to 33.35%

Up to 24.7%

N/A

N/A

SME R&D tax incentive

After 1 April 2023

Up to 18.6%

Up to 21.5%

Up to 27%

N/A

Until 31 March 2024

RDEC

Before 1 April 2023

10.5%

10.5%

N/A

10.5%

RDEC

After 1 April 2023

15%

Up to 16.2%

N/A

Up to 16.2%

From 1 April 2024

Single scheme

16.2%

Up to 16.2%

N/A

Up to 16.2%

SME intensive scheme

.

N/A

N/A

Up to 27%

N/A

* For accounting periods starting on or after 1 April 2024, the R&D intensive threshold for loss-making SMEs falls from 40% to 30%.

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 classed as R&D intensive (spending 40% 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 incentive.

How to calculate R&D for RDEC

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 current R&D tax credit rates for RDEC.

Calculate the impact of the new R&D tax relief rates

Our R&D tax relief calculator helps you assess the indicative impact of changes to rates of relief introduced for expenditure from 1 April 2023.

SME

Fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets.

Although most SMEs use the SME R&D tax relief scheme, there are some factors that might mean you need to use RDEC – or both incentives.

  • Profit making

    • £50,000 spend

      Do you know what costs qualify for R&D tax relief? Find out more

      We estimate you could receive up to £​ 10750 as a tax credit

      To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

      £50,000  x  86% (enhancement rate)  =  £43,000
      x  25% (Corporation Tax rate) =  £10,750
      £10,750  /  £50,000 =  22%
    • £250,000 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 £​ 53750 as a tax credit

      To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

      £250,000  x  86% (enhancement rate)  =  £215,000
      x  25% (Corporation Tax rate) =  £53,750
      £53,750  /  £250,000 =  22%
    • £500,000 spend

      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 £​ 107500 as a tax credit

      To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

      £500,000  x  86% (enhancement rate)  =  £430,000
      x  25% (Corporation Tax rate) =  £107,500
      £107,500  /  £500,000 =  22%
    • £1,000,000 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 £​ 215000 as a tax credit

      To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

      £1,000,000  x  86% (enhancement rate)  =  £860,000
      x  25% (Corporation Tax rate) =  £215,000
      £215,000  /  £1,000,000 =  22%
  • Loss making

    • £50,000 spend
      • £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

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £50,000  x  86% (enhancement rate)  =  £43,000
        £50,000  +  £43,000 (enhancement)  =  £93,000 (enhanced expenditure)
        £93,000  x  14.5% (surrender rate)  =  £13,485
        £13,485  /  £50,000 =  27%
      • £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

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £50,000  x  86% (enhancement rate)  =  £43,000
        £50,000  +  £43,000 (enhancement)  =  £93,000 (enhanced expenditure)
        £93,000  x  14.5% (surrender rate)  =  £13,485
        £13,485  /  £50,000 =  27%
      • £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 £​ 9300 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £50,000  x  86% (enhancement rate)  =  £43,000
        £50,000  +  £43,000 (enhancement)  =  £93,000 (enhanced expenditure)
        £93,000  x  10% (surrender rate)  =  £9,300
        £9,300  /  £50,000 =  19%
      • £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 £​ 9300 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £50,000  x  86% (enhancement rate)  =  £43,000
        £50,000  +  £43,000 (enhancement)  =  £93,000 (enhanced expenditure)
        £93,000  x  10% (surrender rate)  =  £9,300
        £9,300  /  £50,000 =  19%
    • £250,000 spend
      • £250,000 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 £​ 67425 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £250,000  x  86% (enhancement rate)  =  £215,000
        £250,000  +  £215,000 (enhancement)  =  £465,000 (enhanced expenditure)
        £465,000  x  14.5% (surrender rate)  =  £67,425
        £67,425  /  £250,000 =  27%
      • £250,000 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 £​ 67425 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £250,000  x  86% (enhancement rate)  =  £215,000
        £250,000  +  £215,000 (enhancement)  =  £465,000 (enhanced expenditure)
        £465,000  x  14.5% (surrender rate)  =  £67,425
        £67,425  /  £250,000 =  27%
      • £250,000 spend

        £1,000,000 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 £​ 46500 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £250,000  x  86% (enhancement rate)  =  £215,000
        £250,000  +  £215,000 (enhancement)  =  £465,000 (enhanced expenditure)
        £465,000  x  10% (surrender rate)  =  £46,500
        £46,500  /  £250,000 =  19%
      • £250,000 spend

        £2,500,000 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 £​ 46500 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £250,000  x  86% (enhancement rate)  =  £215,000
        £250,000  +  £215,000 (enhancement)  =  £465,000 (enhanced expenditure)
        £465,000  x  10% (surrender rate)  =  £46,500
        £46,500  /  £250,000 =  19%
    • £500,000 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 £​ 134850 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £500,000  x  86% (enhancement rate)  =  £430,000
        £500,000  +  £430,000 (enhancement)  =  £930,000 (enhanced expenditure)
        £930,000  x  14.5% (surrender rate)  =  £134,850
        £134,850  /  £500,000 =  27%
      • £500,000 spend

        £1,000,000 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 £​ 134850 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £500,000  x  86% (enhancement rate)  =  £430,000
        £500,000  +  £430,000 (enhancement)  =  £930,000 (enhanced expenditure)
        £930,000  x  14.5% (surrender rate)  =  £134,850
        £134,850  /  £500,000 =  27%
      • £500,000 spend

        £2,500,000 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 £​ 93000 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £500,000  x  86% (enhancement rate)  =  £430,000
        £500,000  +  £430,000 (enhancement)  =  £930,000 (enhanced expenditure)
        £930,000  x  10% (surrender rate)  =  £93,000
        £93,000  /  £500,000 =  19%
      • £500,000 spend

        £5,000,000 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 £​ 93000 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £500,000  x  86% (enhancement rate)  =  £430,000
        £500,000  +  £430,000 (enhancement)  =  £930,000 (enhanced expenditure)
        £930,000  x  10% (surrender rate)  =  £93,000
        £93,000  /  £500,000 =  19%
    • £1,000,000 spend
      • £1,000,000 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 £​ 269700 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £1,000,000  x  86% (enhancement rate)  =  £860,000
        £1,000,000  +  £860,000 (enhancement)  =  £1,860,000 (enhanced expenditure)
        £1,860,000  x  14.5% (surrender rate)  =  £269,700
        £269,700  /  £1,000,000 =  27%
      • £1,000,000 spend

        £2,500,000 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 £​ 269700 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £1,000,000  x  86% (enhancement rate)  =  £860,000
        £1,000,000  +  £860,000 (enhancement)  =  £1,860,000 (enhanced expenditure)
        £1,860,000  x  14.5% (surrender rate)  =  £269,700
        £269,700  /  £1,000,000 =  27%
      • £1,000,000 spend

        £5,000,000 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 £​ 186000 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £1,000,000  x  86% (enhancement rate)  =  £860,000
        £1,000,000  +  £860,000 (enhancement)  =  £1,860,000 (enhanced expenditure)
        £1,860,000  x  10% (surrender rate)  =  £186,000
        £186,000  /  £1,000,000 =  19%
      • £1,000,000 spend

        £10,000,000 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 £​ 186000 as a tax credit

        To reward businesses for their investment, the government allows you to enhance your qualifying expenditure. You may then surrender losses up to the value of your enhanced R&D expenditure for a payable tax credit.

        £1,000,000  x  86% (enhancement rate)  =  £860,000
        £1,000,000  +  £860,000 (enhancement)  =  £1,860,000 (enhanced expenditure)
        £1,860,000  x  10% (surrender rate)  =  £186,000
        £186,000  /  £1,000,000 =  19%

Large company

500 staff or more and either more than €100 million turnover or €86 million gross assets.

  • £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.

    To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

    £50,000  x  20% (enhancement rate)  =  £10,000
      25% (Corporation Tax rate)  =  £7,500
    £7,500  /  £50,000  =  15%
  • £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.

    To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

    £250,000  x  20% (enhancement rate)  =  £50,000
      25% (Corporation Tax rate)  =  £37,500
    £37,500  /  £250,000  =  15%
  • £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.

    To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

    £500,000  x  20% (enhancement rate)  =  £100,000
      25% (Corporation Tax rate)  =  £75,000
    £75,000  /  £500,000  =  15%
  • £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.

    To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

    £1,000,000  x  20% (enhancement rate)  =  £200,000
      25% (Corporation Tax rate)  =  £150,000
    £150,000  /  £1,000,000  =  15%

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