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

How to calculate R&D tax credits

Having discovered research and development (R&D) tax credits, chances are you’re itching to find out how much this valuable government incentive could be worth to your business. By answering a series of simple questions, our R&D tax credit calculator allows you to estimate your potential claim value – whether you’re due a tax reduction or a cash credit.

Although a useful tool in highlighting the potential benefit R&D tax incentives can bring to your business, no online calculator can substitute for proper advice and is likely to either over or under estimate your claim. Please, proceed with caution!

How to calculate R&D for SMEs

Most companies fit into this category. The rate at which the SME R&D incentive is calculated depends on whether your business is profit- or loss-making:

  • For profit-making businesses, R&D tax credits reduce your Corporation Tax bill. The rate of relief is 25%. So if your R&D spend last year was £100,000, you could get a £25,000 reduction in your tax bill.
  • If you’re a loss-making business, you’ll receive your R&D tax credit in cash because you don’t have a tax liability to offset. The rate of relief is up to 33%. So if your R&D spend last year was £100,000, you could get a £33,000 cash credit.

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 is paid as a taxable credit of 13% of your identified R&D costs. As this is taxable it results in a cash benefit of 11% after tax.

These costs can be offset against your tax bill or, if there is no tax payable, you will receive the net amount as cash. So if your R&D spend last year was £100,000, you could get a £11,000 cash credit or tax reduction.

 

Read more on current R&D tax credit rates for RDEC.

R&D tax credit calculator

Our R&D tax credit calculator helps you to estimate what R&D tax credits could be worth to your business. The information is based on the R&D tax credit rates as of 1 January 2018.

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 credit 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 credits? Find out more

      We estimate you could receive up to £​ 12350 as a tax refund or reduced tax liability

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

      £50,000  x  130% (enhancement rate)  =  £65,000
      x  19% (Corporation Tax rate) =  £12,350
      £12,350  /  £50,000 =  25%
    • £250,000 spend

      Do you know what costs qualify for R&D tax credits? How do you identify how much R&D each staff member does?

      We estimate you could receive up to £​ 61750 as a tax refund or reduced tax liability

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

      £250,000  x  130% (enhancement rate)  =  £325,000
      x  19% (Corporation Tax rate) =  £61,750
      £61,750  /  £250,000 =  25%
    • £500,000 spend

      Do you know how much you can claim for your subcontractors? Can I claim R&D tax credit relief on subcontractors?

      We estimate you could receive up to £​ 123500 as a tax refund or reduced tax liability

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

      £500,000  x  130% (enhancement rate)  =  £650,000
      x  19% (Corporation Tax rate) =  £123,500
      £123,500  /  £500,000 =  25%
    • £1,000,000 spend

      Do you know what costs qualify for R&D tax credits? What costs qualify for R&D tax credits?

      We estimate you could receive up to £​ 247000 as a tax refund or reduced tax liability

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

      £1,000,000  x  130% (enhancement rate)  =  £1,300,000
      x  19% (Corporation Tax rate) =  £247,000
      £247,000  /  £1,000,000 =  25%
  • Loss making

    • £50,000 spend

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

      We estimate you could receive up to £​ 16675 as a tax refund or reduced tax liability

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

      £50,000  x  130% (enhancement rate)  =  £65,000
      £50,000  +  £65,000 (enhancement)  =  £115,000 (enhanced expenditure)
      £115,000  x  14.5% (surrender rate)  =  £16,675
      £16,675  /  £50,000 =  33%
    • £250,000 spend

      Do you know what costs qualify for R&D tax credits? How do you identify how much R&D each staff member does?

      We estimate you could receive up to £​ 83375 as a tax refund or reduced tax liability

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

      £250,000  x  130% (enhancement rate)  =  £325,000
      £250,000  +  £325,000 (enhancement)  =  £575,000 (enhanced expenditure)
      £575,000  x  14.5% (surrender rate)  =  £83,375
      £83,375  /  £250,000 =  33%
    • £500,000 spend

      Do you know how much you can claim for your subcontractors? Can I claim R&D tax credit relief on subcontractors?

      We estimate you could receive up to £​ 166750 as a tax refund or reduced tax liability

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

      £500,000  x  130% (enhancement rate)  =  £650,000
      £500,000  +  £650,000 (enhancement)  =  £1,150,000 (enhanced expenditure)
      £1,150,000  x  14.5% (surrender rate)  =  £166,750
      £166,750  /  £500,000 =  33%
    • £1,000,000 spend

      Do you know what costs qualify for R&D tax credits? What costs qualify for R&D tax credits?

      We estimate you could receive up to £​ 333500 as a tax refund or reduced tax liability

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

      £1,000,000  x  130% (enhancement rate)  =  £1,300,000
      £1,000,000  +  £1,300,000 (enhancement)  =  £2,300,000 (enhanced expenditure)
      £2,300,000  x  14.5% (surrender rate)  =  £333,500
      £333,500  /  £1,000,000 =  33%

Large company

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

  • £250,000 spend

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

    We estimate you could receive up to £​ 26325 as a tax refund or reduced tax liability

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

    £250,000  x  13% (enhancement rate)  =  £32,500
    -  19% (Corporation Tax rate)  =  £26,325
    £26,325  /  £250,000  =  11%
  • £500,000 spend

    Do you know what costs qualify for R&D tax credits? How do you identify how much R&D each staff member does?

    We estimate you could receive up to £​ 52650 as a tax refund or reduced tax liability

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

    £500,000  x  13% (enhancement rate)  =  £65,000
    -  19% (Corporation Tax rate)  =  £52,650
    £52,650  /  £500,000  =  11%
  • £1,000,000 spend

    Do you know what costs qualify for R&D tax credits? How do you identify how much R&D each staff member does?

    We estimate you could receive up to £​ 105300 as a tax refund or reduced tax liability

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

    £1,000,000  x  13% (enhancement rate)  =  £130,000
    -  19% (Corporation Tax rate)  =  £105,300
    £105,300  /  £1,000,000  =  11%
  • £10,000,000 spend

    Do you know what costs qualify for R&D tax credits? What costs qualify for R&D tax credits?

    We estimate you could receive up to £​ 1053000 as a tax refund or reduced tax liability

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

    £10,000,000  x  13% (enhancement rate)  =  £1,300,000
    -  19% (Corporation Tax rate)  =  £1,053,000
    £1,053,000  /  £10,000,000  =  11%

Limitations of a tax credit calculator

Although our calculator is a useful tool for businesses weighing up whether R&D tax incentives are worth their time – hint: they definitely are! – it’s not a substitute for seeking proper, professional advice.

The calculator only tells half the story. Your exact return will depend on how you identify your qualifying costs. Here at ForrestBrown, we will help you to uncover all of your qualifying costs, including those that others might miss. This helps to maximise your return and ensures your final benefit is accurate.

A good quality R&D tax credit adviser will only ever offer you an estimate of your potential claim, after they have gathered detailed information about your business. As well as a discussion with you, this might include:

  • Details of your ownership structure, and whether you are part of a group.
  • Profit and loss statement and/or your company accounts.
  • A list of all of your projects and details of your costs.
  • Your grant funding documentation (if applicable).

Already claiming?

Get in touch to arrange a claim review with our expert team

Not claimed before?

Get in touch to arrange an eligibility assessment

How we get you more

We know that many businesses who do claim R&D tax credits are not getting as much as they could – for example, we were able to double SMD’s claim value. Ultimately, the difference between a good claim and a great one is your choice of adviser.

Here at ForrestBrown, our team of chartered tax advisers, sector specialists, lawyers and former HMRC inspectors manage a high volume of R&D tax credit claims. This experience combined with their unique skillset gives you a robust R&D tax credit claim that stands up to HMRC scrutiny.

Our tax advisers uncover and correctly apportion your qualifying costs, our sector specialists help you to identify qualifying R&D projects, and our quality assurance experts manage risks in your claim. Together they work with you flexibly, and strategically, to ensure that your claim is fully maximised. Now and in the future. The calculator only tells half the story. Your exact return will depend on how you identify your qualifying costs. Here at ForrestBrown, we will help you to uncover all of your qualifying costs, including those that others might miss. This helps to maximise your return and ensures your final benefit is accurate.