Subcontracted R&D costs qualify at 65%.
Used to calculate R&D intensity.
Loss-making R&D-intensive companies (≥30% intensity) get an enhanced 27% rate.
Reg. 07380272 · England & Wales · Est. 2010
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Qualifying Spend
£200,000.00
R&D Intensity
20.0%
Credit Amount
£40,000.00
Net Benefit
£30,000.00
R&D Spend vs Tax Credit
What are R&D tax credits?
R&D tax credits are a UK government incentive designed to encourage companies to invest in innovation. Since April 2024, all companies use the merged R&D scheme which provides an above-the-line credit at 20% of qualifying R&D expenditure. Loss-making R&D-intensive companies (with qualifying spend of at least 30% of total expenditure) can claim an enhanced payable credit rate of 27%.
How is the credit calculated?
The credit is calculated as:
The credit is treated as taxable income for profitable companies, so the net benefit is reduced by the corporation tax payable on the credit. For loss-making companies, the credit can be surrendered for a cash payment from HMRC.
What is the merged R&D tax credit scheme?
From April 2024, all companies use a single merged scheme with a 20% above-the-line credit rate, replacing the old SME and RDEC schemes.
What qualifies as R&D expenditure?
Staff costs, consumables, software, cloud computing, and subcontracted R&D work. The work must seek to achieve an advance in science or technology.
What is the R&D-intensive rate?
Loss-making companies where qualifying R&D spend is at least 30% of total expenditure can claim an enhanced 27% payable credit rate.
How are subcontracted costs treated?
Subcontracted R&D costs qualify at 65% of the amount paid, reflecting that the subcontractor retains some of the R&D benefit.
HMRC-Aligned: This calculator uses official 2025/26 merged R&D scheme rates and rules. Actual claims may vary depending on HMRC's assessment of qualifying expenditure. Consult a specialist R&D tax adviser for complex claims.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms