R&D Tax Credit Calculator 2024/25
Estimate your R&D tax credit under the new merged RDEC scheme (April 2024) and the legacy SME enhanced deduction — with side-by-side comparison, subcontractor 65% rule, and PAYE cap calculation.
R&D Tax Credit Calculator
Merged RDEC scheme (April 2024) vs legacy SME scheme — side-by-side
SME: ≤500 employees AND ≤€100M turnover. Otherwise Large.
Qualifying R&D expenditure breakdown
Salaries, employer NIC, employer pension contributions for R&D staff
SME scheme: only 65% qualifies for unconnected subcontractors
Software licences directly and specifically used in R&D activities
Materials and utilities directly consumed in R&D process
Qualifying since April 2023 — cloud instances, datasets used in R&D
Affects whether you receive a CT reduction or a cash refund
19% for small profits under £50k; 25% for profits over £250k; marginal relief between
SMEs that received a notified state aid grant must use RDEC on affected project costs
5 R&D Tax Credit Planning Tips
- File within 2 years of the accounting period end:R&D claims must be made within 2 years of the period end. Late claims are disallowed — HMRC will not accept them regardless of merit.
- Cloud computing and data costs qualify from April 2023: If you use AWS, Azure, GCP or bought datasets for machine learning or analysis, these costs can now form part of your qualifying expenditure.
- Use a specialist R&D adviser:The average UK R&D claim is over £50,000. A specialist can identify costs you've missed — time apportionment of mixed roles, consumables, test infrastructure — and defend claims under HMRC scrutiny.
- Track staff time carefully:Staff costs are typically the largest qualifying category. Maintain contemporaneous time records (even simple timesheets) to support claims for mixed R&D and non-R&D roles.
- Check grants before applying: Innovate UK grants and some other state aid can prevent SME scheme claims on the same project. Under the merged RDEC scheme this risk is reduced — but grant-funded costs must still be excluded from qualifying spend.
R&D Tax Credit Schemes 2024/25
Merged RDEC Scheme (April 2024 onwards)
A single 20% above-the-line credit for most companies. R&D-intensive SMEs (qualifying spend ≥ 30%) receive 27%. The credit is taxable, so the net benefit after 25% corporation tax is approximately 15% of qualifying expenditure (20% × 75%).
Legacy SME Scheme (pre-April 2024, for reference)
Enhanced deduction of 86% on qualifying costs. Loss-making companies could surrender losses for a 10% payable credit. Profitable SMEs benefited from ~21.5p per £1 at 25% CT rate.
Qualifying Costs — What Counts?
- Staff costs: salary, employer NIC, employer pension
- Subcontractors: 65% of payments to unconnected parties (SME scheme)
- Software licences directly used in R&D
- Cloud computing and data costs (from April 2023)
- Consumables: materials and utilities used in R&D
PAYE Cap
Loss-making companies claiming a cash refund are limited to 3× their PAYE/NIC liability. Profitable companies are unaffected — the credit simply reduces their CT bill.