Calculate your R&D tax credit or enhanced deduction under the SME or RDEC scheme for qualifying research and development expenditure.
This calculator provides estimates for guidance only. R&D tax credit eligibility and rates are subject to HMRC rules. Qualifying expenditure must meet specific criteria. Always consult a qualified tax adviser or R&D specialist.
R&D tax credits are a UK government incentive that rewards companies for investing in innovation. Any UK company that spends money on qualifying research and development activities can reduce its tax bill or, in some cases, receive a cash payment from HMRC. The scheme has been available since 2000 and is one of the most valuable tax reliefs for innovative businesses. For the 2026-27 tax year, there are two main schemes. The SME (Small and Medium Enterprise) scheme allows companies with fewer than 500 employees to claim an enhanced deduction of 86% on qualifying R&D expenditure, effectively reducing taxable profits by an additional 86p for every GBP 1 of qualifying spend. Loss-making SMEs can surrender these enhanced losses for a payable tax credit of 10% (or 14.5% for R&D intensive companies). The RDEC (Research and Development Expenditure Credit) scheme for large companies provides a 20% above-the-line taxable credit. This calculator helps you estimate the value of your R&D tax credit claim, whether you are a profit-making SME looking to reduce your corporation tax bill, a loss-making startup seeking a cash payment, or a large company claiming under the RDEC scheme.
To calculate your R&D tax credit: 1. Enter your qualifying R&D expenditure. This is the total cost of activities that qualify as R&D for tax purposes. It includes staff costs, consumable materials, software, subcontractor costs, and utilities directly related to R&D work. 2. Select your company size. SMEs (fewer than 500 employees, turnover under EUR 100 million or balance sheet under EUR 86 million) use the SME enhanced deduction scheme. Large companies use the RDEC scheme. If you are an SME but your R&D is subsidised or you are a subcontractor, you may need to use RDEC. 3. Choose your profit status. This matters for SMEs only. Profit-making SMEs receive a deduction that reduces their corporation tax bill. Loss-making SMEs can surrender their enhanced losses for a payable cash credit. 4. Confirm the corporation tax rate. The standard rate for 2026-27 is 25% for companies with profits over GBP 250,000. The small profits rate of 19% applies to profits under GBP 50,000, with marginal relief between. 5. Review your results. The calculator shows the tax credit or saving amount, the enhanced deduction, the effective benefit, the benefit as a percentage of expenditure, and the net cost of your R&D after the benefit.
R&D tax credit calculations differ between schemes: SME Profit-Making: Your qualifying expenditure receives an enhanced deduction of 86%. For GBP 100,000 of qualifying spend, the enhanced deduction is GBP 86,000. The tax saving is this deduction multiplied by your corporation tax rate. At 25%, that is GBP 86,000 x 25% = GBP 21,500. Your effective benefit rate is 21.5% of qualifying expenditure. SME Loss-Making: You can surrender the total enhanced expenditure (100% + 86% = 186% of qualifying spend) as losses for a payable credit. For GBP 100,000, the surrenderable loss is GBP 186,000. At the standard credit rate of 10%, the cash payment is GBP 18,600. R&D intensive companies (where qualifying R&D exceeds 30% of total costs) receive 14.5%, giving GBP 26,970. Large Company RDEC: The credit is 20% of qualifying expenditure. For GBP 100,000, the gross credit is GBP 20,000. However, RDEC is taxable, so the net benefit after corporation tax at 25% is GBP 15,000. The effective benefit rate is 15%. In all cases, the net cost of R&D is the qualifying expenditure minus the effective benefit. For a profit-making SME spending GBP 100,000, the net cost after the GBP 21,500 benefit is GBP 78,500.
Qualifying R&D activities must seek an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty. This does not require the project to succeed -- the attempt itself qualifies if there was genuine uncertainty about whether the advance could be achieved. Staff costs are typically the largest component of an R&D claim. This includes gross salaries, employers National Insurance contributions, and pension contributions for employees directly involved in qualifying R&D activities. The proportion of their time spent on qualifying work must be reasonable and evidifiable. Subcontractor costs are eligible but at reduced rates. SMEs can claim 65% of payments to unconnected subcontractors and externally provided workers. Connected party payments are restricted to the relevant costs incurred by the subcontractor. The merged scheme announced in the Autumn Statement is expected to replace both SME and RDEC with a single scheme in future years. Companies should monitor HMRC guidance for any changes that affect their claims. R&D claims must be made within two years of the end of the accounting period in which the expenditure was incurred. Claims are made through the company tax return (CT600) and supporting computations. HMRC has significantly increased compliance activity around R&D tax credit claims. Companies should maintain contemporaneous records of their R&D activities, including project descriptions, technical uncertainties addressed, how the work sought an advance, and detailed cost records. Claims lacking proper documentation are increasingly challenged. The definition of qualifying expenditure has been updated to include data and cloud computing costs from April 2023. Pure mathematics was also added as a qualifying field alongside science and technology. Companies receiving state aid, grants, or subsidies for their R&D work may be restricted from using the SME scheme and required to claim under RDEC instead. Seek specialist advice if your R&D is partially funded by grants.