R&D Tax Credit Calculator UK 2025/26

R&D tax credit calculator UK 2025/26 — SME scheme 14.5% / 20% RDEC. Qualifying expenditure, enhanced relief, payable cre

Quick answer: UK R&D tax credit 2025/26 (post-Apr 2024 reform): SME scheme 14.5% repayable credit on qualifying losses (loss-making) or 26% effective tax saving (profitable). RDEC 20% above-the-line for large companies.
Mustafa Bilgic
Reviewed by Mustafa Bilgic · UK Calculator Editor ·

Calculator

R&D tax credits incentivise UK companies investing in research and development. The 2024 reforms simplified two schemes (SME and RDEC) into a merged scheme effective from 1 April 2024. This calculator handles the new rules + transitional relief for periods straddling April 2024.

How r&d tax credit calculator works in 2025/26

UK R&D tax credit rules 2025/26 (post-Apr 2024 reform):

SchemeEligibleRateNet benefit
Merged scheme (RDEC-style)All companies20% above-the-line credit~15% net of corporation tax
R&D Intensive SME (≥30% R&D)Loss-making SME spending ≥30% on R&D14.5% payable credit on enhanced loss~26.97% of qualifying spend
Pre-Apr 2024 SME (transitional)Periods straddling Apr 202410% (loss) / 21.5% (profit)Phased out

What qualifies as R&D?

  • Activities seeking advance in science or technology
  • Resolving scientific or technological uncertainty
  • Not readily deducible by competent professionals in the field
  • Examples: software development (genuine novel algorithms), engineering breakthroughs, medical research, materials science

Qualifying expenditure:

  • Staff costs (salary, NI, pension contributions) for R&D personnel
  • Externally Provided Workers (EPW) — 65% of cost typically
  • Subcontracted R&D — 65% of cost (post-2024 changes)
  • Software, consumables, utilities used in R&D
  • Cloud computing costs (added 2023)

Worked example: Profitable SME £200k R&D spend, merged scheme

Above-the-line credit 20% × £200,000 = £40,000. Taxed at corp tax 25% = £30,000 net cash benefit (15% of qualifying spend).

Gross: £200,000 → Take-home: £30,000.00/year (£2,500.00/month)

Worked example: Loss-making R&D Intensive SME £500k spend

Enhanced expenditure (£500,000 + 86%) = £930,000. Surrendered loss × 14.5% = £134,850 payable credit. Net benefit ~26.97% of qualifying spend.

Gross: £500,000 → Take-home: £134,850.00/year (£11,237.50/month)

Worked example: Large company £2M R&D, RDEC scheme

20% × £2,000,000 = £400,000 above-the-line credit. Net cash after corp tax (25%) = £300,000 (15% of spend). Paid as cash if no tax to offset.

Gross: £2,000,000 → Take-home: £300,000.00/year (£25,000.00/month)

Frequently asked questions

What is the R&D tax credit reform from April 2024?
Single merged scheme replaced separate SME and RDEC schemes for accounting periods starting on/after 1 April 2024. New rate: 20% above-the-line credit (RDEC-style). Special rate for R&D Intensive SMEs: 14.5% payable credit on enhanced loss.
What qualifies as an "R&D Intensive SME"?
SME (employees <500, turnover <€100M, balance sheet <€86M) where ≥30% of total expenditure is qualifying R&D. Threshold dropped from 40% in April 2024 to make scheme accessible to more SMEs.
Can I claim R&D for software development?
Yes — but ONLY genuine R&D (resolving technical uncertainty, novel algorithms, unproven approaches). NOT routine coding, applying existing libraries, or product configuration. HMRC scrutinises software claims heavily — get specialist advice.
How far back can I claim R&D credits?
2 accounting periods (≈24 months from end of accounting period). E.g. accounting period ending 31 Dec 2024 must claim by 31 Dec 2026. Late claims rejected.
Are subcontracted R&D costs eligible?
Yes — but rules changed April 2024. The COMPANY commissioning the work claims (not the subcontractor). Connected party = 100% qualifying. Unconnected = 65% qualifying. Subcontractor cannot also claim on same work.
What's the merged scheme net benefit?
For PROFITABLE companies: 20% credit × (1 - 25% corp tax) = 15% net of qualifying R&D spend. £100k spend = £15k cash benefit. For LOSS-MAKING: complex calculation, typically 16-19% net depending on overall position.
Do I need professional advisor?
For claims under £50k: arguable can DIY with HMRC guidance. £50k+: specialist R&D tax advisor strongly recommended. HMRC enquiry rate has surged — claims with weak technical narratives or unsupported costs are challenged. Top advisors charge 15-25% of credit on success-fee basis.

Official UK Sources

Last reviewed: May 2026 against HMRC 2025/26 rates.

Related Calculators

Salary Calculator | Tax Calculator | National Insurance Calculator | Pension Calculator | Vat Calculator