Use our R&D tax credit calculator to estimate your potential R&D tax credit claim.
The R&D tax credit scheme is a government incentive that allows innovative companies to claim tax relief on their R&D costs. It can be challenging to figure out how much you can claim, particularly with recent changes to the scheme. Use our R&D tax credit calculator for a quick estimate of your potential claim.
Find out how much your business can claim
What’s the difference between a SME and Large Company?
For the purposes of calculating R&D tax relief, it’s important to determine whether your company qualifies as a SME for R&D tax purposes. To qualify as an SME, your business must have less than 500 staff. In addition, your annual turnover must be less than €100m, or your balance sheet total must be under €86m.
For accounting periods beginning on or after the 1st April 2024, the Enhanced R&D Intensive SME scheme (ERIS) is available for qualifying SMEs. For accounting periods before this date, the SME tax credit scheme applies.Add image
Does it matter whether we’re a profit-making or loss-making company?
Your firm’s financial position can affect the schemes you’re eligible for, and how you receive your credit. See our guide to R&D tax relief for loss-making companies.
What costs qualify for R&D expenditure?
Over 90% of the costs we claim for are typically in three areas: staff costs, consumables and subcontractors.
- Consumables are the physical materials, hardware and resources used up by the R&D. The most common examples are fuel, power, water and chemicals.
- Staff are those employees engaged in the R&D while being on your payroll, whereas subcontractors will typically charge by invoice, and aren’t enrolled on your payroll.
For a more complete breakdown of the costs you can claim, consult our guide to qualifying R&D costs.
What about accounting periods that started before 1st April 2024?
For accounting periods that started before the 1st April 2024, the SME and RDEC schemes will apply to your claim. See the example SME scheme calculations and RDEC scheme calculations.
How is R&D Tax Relief calculated?
Our R&D tax credit calculator gives you an instant estimate of how much your business may be able to claim. In practice, there are some other things to consider (such as whether the PAYE cap applies to your claim, whether you’ve received any grant funding, and whether there are any linked or partner enterprises). It’s also important to calculate your R&D costs very carefully, splitting out your spend as appropriate across qualifying and non-qualifying categories.
Here are some examples of how R&D tax relief is calculated on the merged R&D scheme:
Example 1: Loss-making SME (19% Corporation Tax)
- R&D costs: £100,000
- PAYE/NIC costs: £30,000
- No other liabilities
Calculation:
- Offset corporation tax: N/A
- Notional tax (19%): £100,000 x 20% = £20,000; £20,000 x (1-19%) = £16,200
- PAYE cap: £20,000 + (£30,000 x 3) = £110,000 (cap not exceeded)
- Honour corp tax: N/A
- Group relief: No
- Other liabilities: No
- Credit paid: £16,200 (16.2% of R&D costs)
Example 2: Profitable company (25% Corporation Tax)
- R&D costs: £100,000
- PAYE/NIC costs: £30,000
- No other liabilities
Calculation:
- Offset corporation tax: N/A
- Notional tax (25%): £100,000 x 20% = £20,000; £20,000 x (1-25%) = £15,000
- PAYE cap: £20,000 + (£30,000 x 3) = £110,000 (cap not exceeded)
- Honour corp tax: N/A
- Group relief: No
- Other liabilities: No
- Credit paid: £15,000 (15% of R&D costs)
For claims being made under other R&D schemes, see the example calculations under the ERIS, SME and RDEC schemes.
For a more detailed estimate of how much R&D tax credit you can claim, contact our team.
