Quick answer: The R&D merged scheme is a single UK tax relief that replaced the separate SME and RDEC schemes for accounting periods starting on or after 1 April 2024. It pays a 20% taxable credit on qualifying R&D spend. Loss-making, R&D-intensive companies can instead claim under ERIS at a higher effective rate.
Since April 2024, most UK companies claiming R&D tax relief have moved onto a single scheme instead of choosing between the old SME and RDEC rules. HMRC's own guidance sets out exactly how the merged scheme and Enhanced R&D Intensive Support (ERIS) work, and getting the mechanics right changes what a claim is actually worth. This guide covers what changed, how much the credit pays, and who should look at the loss-making route instead.
What Is the R&D Merged Scheme?
The R&D merged scheme is the single relief that replaced the separate SME and RDEC rules for accounting periods beginning on or after 1 April 2024. Instead of two sets of rules with different rates and mechanics, every company, except the loss-making, R&D-intensive companies who qualify for ERIS, claims on the same basis: an above-the-line credit on qualifying R&D expenditure. Our glossary covers the terms used across both the old and new systems if any of the language here is unfamiliar.
How Much Is the Merged Scheme Credit Worth?
HMRC states the rate of R&D expenditure credit under the merged RDEC scheme is 20% of qualifying expenditure. That credit is paid above the line, meaning it shows as income in the accounts, and it is liable to Corporation Tax because it is classed as trading income. After tax, the cash value depends on which Corporation Tax rate the company pays: profits over £250,000 are taxed at the 25% main rate, and profits under £50,000 at the 19% small profits rate, with marginal relief between the two. On a £100,000 qualifying spend, a company paying the 25% main rate keeps around £15,000 net of tax, while a company on the 19% small profits rate keeps around £16,200 net of tax [own-analysis].
What Is ERIS and Who Qualifies as Loss-Making and R&D-Intensive?
Loss-making companies where relevant R&D expenditure is at least 30% of total expenditure, including that of any connected companies, can claim under Enhanced R&D Intensive Support (ERIS) instead of the standard merged scheme. ERIS keeps the older SME-style mechanic: companies can deduct an extra 86% of qualifying costs on top of the normal 100% deduction, a 186% total deduction, and then surrender the resulting loss for a payable tax credit worth up to 14.5% of the surrenderable loss. Multiplying those two figures together gives the effective cash benefit often quoted as up to 27p for every £1 of qualifying spend [own-analysis].
The intensity test is assessed separately for each accounting period, so a company that qualifies one year is not guaranteed to qualify the next if its expenditure mix changes.
Are Overseas R&D Costs Still Claimable?
The merged scheme guidance confirms there are restrictions on claiming for some expenditure incurred overseas, covering both subcontractors and externally provided workers. Companies that rely on offshore development teams or overseas contractors should check our dedicated guide to externally provided workers for how the restriction actually works in practice, because it depends on where the worker is taxed, not simply where they are based.
Does My Company Need to Submit the Additional Information Form?
Yes. Every R&D claim, whether under the standard merged scheme or ERIS, needs a completed Additional Information Form submitted to HMRC before or at the same time as the company tax return. Our eligible expenditure guide sets out the cost categories the form asks a company to break down.
Get a Written View, No Call Required
Working out whether a company falls under the standard merged scheme or ERIS, and what that is worth in cash terms, is easiest with an actual figure in front of you. Try our free R&D tax credit calculator for an indicative range based on your numbers, or see the UK R&D tax credit statistics page for the wider claim data context. No call required; if a written second opinion is more useful, just reply and we will send one within 48 hours [own-analysis].
Frequently Asked Questions
It is the single R&D tax relief that replaced the old SME and RDEC schemes for accounting periods starting on or after 1 April 2024, paying one above-the-line credit rate to most claimant companies instead of two separate sets of rules.
The credit rate is 20% of qualifying R&D expenditure, taxable as trading income, so the net cash benefit is lower than 20p in the pound once Corporation Tax is deducted [own-analysis].
ERIS is for loss-making companies where relevant R&D expenditure is at least 30% of total expenditure; qualifying companies get a bigger deduction and a payable credit instead of the standard 20% above-the-line rate.
Yes, the merged scheme guidance confirms restrictions on some overseas expenditure for both subcontractors and externally provided workers. See our externally provided workers guide for the detail on staff costs specifically.
The rules are applied to the whole accounting period based on its start date, not split within it. HMRC's guidance confirms the merged scheme and ERIS apply to accounting periods beginning on or after 1 April 2024, so a period that started earlier stays under the old SME or RDEC rules for its entire length, even if it runs past that date.
Yes, every claim needs one submitted before or alongside the company tax return, regardless of whether the claim falls under the standard merged scheme or ERIS.
Start with our free R&D tax credit calculator for an indicative range. If you want a written view instead of a call, just reply and we will send one within 48 hours [own-analysis].
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