R&D Tax Credits: A Complete UK Guide for 2026
R&D tax credits are a UK government incentive that reduces Corporation Tax, or pays cash to loss-making companies, for money spent on research and development in science or technology. For accounting periods from 1 April 2024, most companies get a 20% taxable credit under the merged scheme, and research intensive loss-making SMEs can get up to 26.97p per pound through ERIS.
What are R&D tax credits?
R&D tax credits are HMRC's way of returning part of the cost of research and development to UK companies. They are formally called R&D tax relief, and they work either as a reduction in Corporation Tax or, for companies with no tax to pay, as a cash payment. The aim is to encourage companies to take on technical risk: work where the outcome is uncertain and the knowledge gained moves a field forward.
UK companies claimed £8.2 billion of relief across 40,325 claims in 2024 to 2025, on £51.0 billion of qualifying spending, according to HMRC's official statistics. See our UK R&D tax credit statistics for the full breakdown.
Who can claim R&D tax credits?
A company can claim if it is liable to UK Corporation Tax and carried out qualifying R&D. Company size, sector and profitability decide which scheme applies, not whether you can claim. Sole traders and partnerships cannot claim, because the relief works through Corporation Tax.
- Limited companies of any size, from start-ups to large groups
- Profitable companies, which reduce their tax bill
- Loss-making companies, which can receive a cash payment
- Any sector, from software and manufacturing to food and drink and construction
What counts as R&D for tax?
Work counts as R&D when it seeks an advance in science or technology by resolving uncertainty that a competent professional in the field could not readily resolve. The test comes from the government guidelines on the meaning of R&D for tax purposes. It is about the technical problem, not about whether the product is new to the market. Failed projects can qualify; routine development, cosmetic design and work in the arts and social sciences cannot. Our eligibility guide has worked examples.
How much are R&D tax credits worth in 2026?
| Company | Scheme | How it works | Net benefit per £1 |
|---|---|---|---|
| Profitable, 25% tax | Merged scheme | 20% taxable credit | 15p |
| Profitable, small profits rate | Merged scheme | 20% taxable credit | 16.2p |
| Loss-making | Merged scheme | 20% credit, notional tax at 19% | 16.2p |
| Loss-making SME, R&D at least 30% of spend | ERIS | 86% extra deduction, losses surrendered at 14.5% | Up to 26.97p |
Example: a profitable SME paying 25% tax spends £200,000 on qualifying R&D. Its merged scheme credit is £40,000 before tax, worth about £30,000 after tax. Try your own figures in the R&D tax credit calculator.
Earlier periods use the old SME and RDEC rules. The full comparison is in our merged scheme vs ERIS guide. Source: HMRC guidance on the merged scheme and ERIS.
Which costs can you claim?
You can claim for staff costs, externally provided workers, subcontracted R&D, consumables, software, cloud computing and data licences, and payments to clinical trial volunteers, to the extent they relate to qualifying R&D. Since April 2024, contractor and agency costs generally need to relate to work in the UK. Capital spending, rent and overheads do not qualify. See our qualifying costs guide.
How do you claim R&D tax credits?
Check the claim notification
First-time and returning claimants must notify HMRC within six months of the period end.
Identify projects and costs
Test each project against the definition and apportion the qualifying costs.
Submit the Additional Information Form
Project descriptions and cost breakdowns go to HMRC before the return.
File the Corporation Tax return
Include the R&D figures within two years of the end of the accounting period.
Full details are in our deadlines guide.
What is changing in 2027?
In the Autumn Budget on 28 October 2026, the government announced that the claim notification requirement will be removed from April 2027 and the Additional Information Form simplified from autumn 2027. It is also consulting on simplifying the ERIS intensity test and the PAYE cap exemption. Until the changes take effect, the current rules apply. Source: HM Treasury consultation, October 2026.
Should you use an R&D tax credit specialist?
You can claim yourself or through your accountant, and simple repeat claims often do not need a specialist. A specialist adds most value when the claim is a first claim, the projects are technical or borderline, ERIS or the PAYE cap is involved, or HMRC has opened an enquiry. Read how to choose an R&D tax specialist, or get matched free with a vetted R&D tax credit specialist from our panel.
Common R&D tax credit mistakes
- Missing the six-month claim notification deadline
- Claiming routine development or whole commercial projects
- Including overseas contractors after April 2024
- Getting the ERIS 30% intensity test wrong for connected companies
- Using an adviser who promises a figure before seeing your projects
Frequently asked questions
What are R&D tax credits in simple terms?
They are money back from HMRC, as a tax reduction or a cash payment, for part of what your company spent trying to solve scientific or technological problems.
Are R&D tax credits only for big companies?
No. Most claims come from SMEs. In 2024 to 2025, SME and ERIS claims made up 24,570 of the 40,325 claims, and 91% of merged scheme claims came from SMEs.
Can a loss-making company get R&D tax credits?
Yes. Loss-making companies can receive a payable credit in cash, worth about 16.2p per pound under the merged scheme or up to 26.97p under ERIS if they are R&D intensive.
How far back can I claim R&D tax credits?
Up to two years from the end of the accounting period, provided you submitted any required claim notification in time.
Do I need an R&D tax specialist to claim?
No, you can claim yourself or through your accountant. A specialist adds most value for first claims, technical projects, ERIS claims and anything involving contractors or connected companies.
Are R&D tax credits taxable?
The merged scheme credit is taxable, which is why it is worth 15p to 16.2p per pound net rather than 20p. ERIS works through an enhanced deduction instead.
Get matched with a vetted R&D tax specialist
Tell us what you do and roughly what you spend on development. We check the basics, then introduce you to a specialist from our panel whose sector experience fits your work.
- Free to use, with no obligation to appoint anyone
- Introductions only to firms that meet our panel criteria
- Fee terms in writing from the firm before you sign anything
- We flag claim deadlines we can see from your answers
Our matching service is free for businesses. Specialist firms on our panel pay us a fee when we introduce a business to them. That fee does not change the price a firm quotes you, and you are never obliged to appoint anyone we introduce.