R&D Tax Credit Calculator

Estimate R&D tax credits for profitable and loss-making companies under the merged RDEC scheme.

Last updated: April 2026 · Source: GOV.UK – R&D Tax Relief

£

Estimated R&D Tax Benefit

£15,000.00

RDEC (Above the Line)

How it works (merged scheme from April 2024):

Profitable companies: 20% RDEC credit on qualifying R&D spend, taxed at corporation tax rate.

Loss-making companies: 86% enhanced deduction, can be surrendered for a cash credit.

Qualifying costs: staff, subcontractors, consumables, software, cloud computing used for R&D.

Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

From 1 April 2024, the UK operates a merged R&D tax relief scheme replacing the previous separate SME and RDEC schemes. Under the merged scheme, qualifying companies receive a taxable above-the-line credit of 20% on eligible R&D expenditure. This credit is calculated on the total qualifying costs—staff costs, software, consumables, subcontracted R&D (at 65% of cost for connected parties), and externally provided workers (at 65%)—minus any grant or subsidised income related to the R&D.

R&D-intensive SMEs—companies where qualifying R&D expenditure represents 30% or more of total expenditure—receive an enhanced rate of 27% under the Enhanced R&D Intensive Support (ERIS) scheme. Loss-making R&D-intensive companies can surrender losses for a payable tax credit at a higher rate, providing vital cash flow for pre-revenue startups. To qualify as R&D, the project must seek an advance in science or technology by resolving scientific or technological uncertainty that a competent professional could not readily deduce.

Claims are made through the Corporation Tax return (CT600) and must include a detailed technical narrative explaining the R&D activities, the uncertainties faced, and how they were addressed. From April 2023, all claims must also be supported by a pre-notification to HMRC (if the company has not claimed in the previous three years) and include a named senior officer of the company endorsing the claim. HMRC actively investigates claims, so maintaining contemporaneous project records, timesheets, and technical documentation is critical.

R&D credit for a software company with £200,000 qualifying spend

  1. Qualifying R&D expenditure: staff £150,000 + cloud computing £30,000 + subcontractors (65% of £40,000) £26,000 = £206,000.
  2. Merged scheme credit: £206,000 × 20% = £41,200 taxable credit.
  3. Company has £100,000 taxable profit. Credit reduces CT liability: £100,000 × 25% = £25,000 CT, offset by £41,200 credit.
  4. Tax on the credit itself: £41,200 × 25% = £10,300. Net benefit: £41,200 − £10,300 = £30,900.
  5. Effective tax position: £25,000 CT − £30,900 net credit = -£5,900 (refundable or carried forward).

Source: GOV.UK – R&D Tax Relief

Frequently Asked Questions

What does the R&D Tax Credit Calculator do?
Estimate R&D tax credits for profitable and loss-making companies under the merged RDEC scheme. All calculations are performed in your browser using official UK rates and thresholds.
Is this suitable for my business?
This calculator provides general estimates based on standard UK business rates and rules. Every business is different — consult your accountant for advice specific to your circumstances.
Does this use 2025/26 tax rates?
Yes. All rates and thresholds are based on the current 2025/26 UK tax year. Corporation Tax main rate is 25% for profits over £250,000, with a 19% small profits rate.