Definition
The merged R&D scheme is the unified UK research and development tax relief that applies for accounting periods beginning on or after 1 April 2024. It replaces the separate SME scheme and the Research and Development Expenditure Credit, consolidating the rules on qualifying expenditure, subcontracting, subsidised expenditure and grant interaction. The relief is delivered as a 20% above-the-line expenditure credit available to companies of all sizes. A separate higher-rate Enhanced R&D Intensive Support track remains for loss-making R&D-intensive SMEs.
How HMRC defines it
HMRC guidance on the merged scheme is at CIRD90100 onwards of the CIRD Manual. The legislation is in Chapter 1A of Part 13 of the Corporation Tax Act 2009 inserted by Finance (No. 2) Act 2023. Key technical changes include UK-workforce rules for subcontractors and externally provided workers, and simplification of the subsidised-expenditure mechanism.
Practical example
A medium-sized engineering group with £3,000,000 of qualifying R&D expenditure in its year ended 30 September 2025 claims under the merged scheme. The pre-tax credit is £600,000, and the post-tax net benefit at the 25% main corporation tax rate is approximately £450,000, equivalent to 15p per £1 of qualifying spend.