What is R&D Tax Credit?

Research and Development (R&D) tax credits are an HMRC incentive allowing qualifying UK companies to deduct an enhanced amount of R&D expenditure from taxable profits, or claim a cash credit if loss-making. From April 2024, the previous SME and RDEC schemes merged into a single scheme offering a 20% above-the-line credit for most companies; an enhanced rate of 27% applies to R&D-intensive SMEs that spend more than 30% of total expenditure on qualifying R&D. Qualifying costs include staff wages, software, materials consumed in research and subcontracted work. Claims must be submitted within two years of the end of the accounting period.