R&D Tax Credits: Complete Guide for UK SMEs

What Are R&D Tax Credits?

R&D tax credits reward UK companies for investing in innovation. From April 2024, the SME and RDEC schemes have merged into a single Research and Development Expenditure Credit (RDEC) scheme.

What Qualifies as R&D?

R&D for tax purposes means projects that seek to achieve an advance in science or technology through resolving scientific or technological uncertainties.

• Developing new products, processes or services
• Appreciably improving existing products or processes
• Using science or technology in a new way
• Overcoming technical challenges

The New Merged R&D Scheme (2024)

The merged scheme offers a 20% credit on qualifying R&D expenditure, calculated as an above-the-line credit rather than an enhanced deduction.

Qualifying Expenditure

You can claim relief on staff costs, software, consumables, subcontractor costs and certain other expenses directly attributable to R&D activities.

Common Sectors Claiming R&D

• Software development and IT
• Manufacturing and engineering
• Food and beverage production
• Construction and architecture
• Pharmaceuticals and biotechnology

How We Can Help

Our R&D tax credit specialists can identify qualifying projects, prepare technical reports, quantify eligible costs and liaise with HMRC throughout the claim process. Contact us for a free R&D eligibility assessment.