What is Enhanced R&D Intensive Support (ERIS)?

Enhanced R&D Intensive Support (ERIS) is a specialised statutory relief retained specifically for loss-making, research-intensive SMEs. To qualify, a company's qualifying R&D expenditure must represent at least 30% of its total relevant company expenses. Eligible SMEs receive an additional 86% tax deduction (total 186% deduction) and can surrender their R&D trading losses to HMRC for a 14.5% payable cash tax credit, generating a net cash return of up to 26.97% of qualifying expenditure.

What expenditure qualifies for UK R&D tax relief?

Eligible costs include: (1) Direct staff costs (gross salaries, employer Class 1 NICs, and pension contributions for employees directly involved in R&D); (2) Subcontractor costs (subject to new merged rules where the customer claiming contractor costs must have contracted out the R&D; 65% qualifying rate for unconnected third parties); (3) Externally Provided Workers (EPWs, at 65%); (4) Consumables and utilities consumed in the research; and (5) Software licences, cloud computing, and dataset costs.

Are overseas R&D costs still eligible?

Under statutory reforms taking effect from 1 April 2024, expenditure on overseas subcontractors and externally provided workers is generally excluded from R&D relief unless it would be wholly unreasonable to replicate the conditions in the UK (for example, specific geographical, ecological, or regulatory conditions that cannot be met domestically, such as deep-sea testing or local clinical trials). Pure cost differences or workforce availability do not qualify as valid exceptions.

What is the PAYE/NIC cap on payable R&D cash credits?

To prevent fraud, HMRC enforces a PAYE/NIC cap on payable cash tax credits. The maximum payable credit is capped at £20,000 plus 300% of the company's total PAYE and NIC liabilities for the period. An exemption applies if the company's employees are actively managing the creation or exploitation of intellectual property and less than 15% of its R&D expenditure is subcontracted to connected persons.

How do I submit an R&D tax relief claim to HMRC?

Claims are submitted via the company's CT600 Corporation Tax return alongside a mandatory online Additional Information Form (AIF) submitted before or alongside the return. The AIF requires detailed technical project descriptions demonstrating how the project sought to achieve an advance in science or technology by resolving scientific or technological uncertainties.

Statutory 2026/27 Merged RDEC & ERIS Framework

R&D Tax Relief Calculator UK

Calculate Corporation Tax credits under the consolidated Merged RDEC scheme (20%) and Enhanced R&D Intensive Support (ERIS 26.97%) for innovative companies and tech SMEs.

20% Gross Merged RDEC26.97% ERIS Cash Credit30% Intensity Threshold

R&D Benchmark Scenarios (Merged Scheme & ERIS 2026/27):

Company Status & R&D Expenditure

Merged RDEC scheme & ERIS rules for accounting periods starting on or after 1 April 2024.

Company Size Classification

Current Profit / Tax Position

Total Company Expenses (£)

Required to evaluate 30% ERIS intensity.

Corporation Tax Rate

Direct In-House Staff Costs (£) — 100% Qualifying

Gross wages, employer Class 1 NIC, and workplace pension contributions.

Subcontractors (£) (65% rate)

Qualifying: £52,000.00

Agency Workers / EPWs (£) (65%)

Qualifying: £26,000.00

Cloud Computing, Software & Consumables (£) — 100% Qualifying

AWS/Azure cloud hosting for R&D, lab materials, CAD tools, and software licences.

R&D Tax Benefit: ERIS2026/27 Rules

Payable Cash Tax Credit:

£123,522.60

Net cash benefit rate: 26.97% of qualifying spend

ERIS Intensive SME Scheme Applied (26.97% Cash Return)

R&D intensity is 70.5% (exceeds 30% threshold for enhanced ERIS loss surrender).

Total Qualifying R&D (QRE):£458,000.00

R&D Intensity Ratio:70.5%

Side-by-Side Scheme Comparison (Post-April 2024 Rules)

Statutory Scheme	Gross Rate	Net Return	Net Cash Benefit
Merged RDEC (Unified)	20.0%	15.0%	£68,700.00
ERIS (R&D Intensive SME)Requires ≥30% intensity & loss	186.0%	26.97%	£123,522.60

Eligible Expenditure Summary

Direct In-House Staffing (100%):£320,000.00

Third-Party Subcontractors (65%):£52,000.00

Externally Provided Workers (65%):£26,000.00

Software, Cloud & Consumables (100%):£60,000.00

Total Qualifying R&D Spend (QRE):£458,000.00

Statutory Architecture

How the UK R&D Tax Relief Architecture Works in 2026/27

Following landmark reforms enacted in the Finance Act 2024, the UK replaced its historical two-tier R&D framework with a streamlined structure. For accounting periods beginning on or after 1 April 2024, the old SME scheme and the large-company RDEC scheme were merged into a single Merged RDEC Scheme, preserving a targeted scheme called Enhanced R&D Intensive Support (ERIS) for loss-making SMEs.

Under the unified Merged RDEC Scheme, companies receive a taxable expenditure credit equal to 20% of their Qualifying R&D Expenditure (QRE). Because this credit is treated as taxable trading income, its net value after Corporation Tax is 15.0% for companies subject to the 25% main rate, or 16.2% for companies paying the 19% small profits rate.

Merged RDEC Scheme vs Enhanced R&D Intensive Support (ERIS)

Feature	Merged RDEC Scheme	ERIS (R&D Intensive SME)
Eligible Companies	All companies (Large & Non-Intensive SMEs)	Loss-making SMEs meeting ≥30% R&D intensity
Statutory Relief Mechanism	20% gross taxable expenditure credit	186% enhanced deduction (100% cost + 86% extra)
Net Benefit Rate	15.0% (at 25% CT) / 16.2% (at 19% CT)	Up to 26.97% payable cash credit
Payable Credit Loss Surrender	Subject to 7-step RDEC offset rules	14.5% flat cash surrender on trading loss
Subcontractor Treatment	Customer claims if contracted out (65%)	65% on qualifying UK subcontracts

Qualifying Expenditure Categories

Direct Staffing Costs (100%)Salaries, gross wages, employer National Insurance contributions (Class 1), and pension contributions for staff directly engaged in R&D projects.

Subcontractors & EPWs (65%)Unconnected third-party UK subcontractors and externally provided agency workers qualifying under the 65% statutory relief rate.

Cloud Computing & Data (100%)Data licence costs, cloud compute instances (AWS, Google Cloud, Azure), and software licences dedicated to technical development.

Consumable Materials (100%)Physical materials, lab reagents, prototypes, and power/water consumed or transformed during scientific experimentation.

Frequently Asked Questions About UK R&D Tax Credits

Frequently Asked Questions

Clear answers based on official HMRC rules and statutory guidance.

For accounting periods beginning on or after 1 April 2024, HMRC consolidated the legacy SME scheme and the large-company RDEC regime into a single unified 'Merged RDEC Scheme'. Under this system, companies of all sizes receive a gross taxable credit equal to 20% of their Qualifying R&D Expenditure (QRE). Because the credit is subject to Corporation Tax, profitable companies paying 25% CT achieve a net cash benefit of 15% of their eligible R&D spend.

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A screening estimate, not an R&D decision

Eligibility depends on a qualifying science or technology advance and the accounting period. Commercial novelty or routine software work alone does not establish eligibility.

Merged R&D expenditure credit and Enhanced R&D Intensive Support have distinct eligibility, intensity, subsidy and loss-making conditions. Taxable credits and offsets may change the net cash result.

Check the rules for your circumstances

Official guidance supports the rules described here; it does not approve or certify this calculator. Confirm dates, eligibility and unsupported cases before making a financial decision.