Key facts
- The merged scheme applies to accounting periods beginning on or after 1 April 2024.
- It provides a 20% above-the-line taxable credit (RDEC-style) for all companies.
- The former SME enhanced deduction and separate RDEC scheme no longer apply to new periods.
- Loss-making R&D-intensive SMEs can claim an enhanced payable credit worth an effective 27%.
- A claim notification form is mandatory for first-time and lapsed claimants.
Why a Merged Scheme?
Before April 2024, the UK had two separate R&D relief regimes: the SME scheme (an enhanced deduction of 130%, later reduced to 86%) and the RDEC scheme (a 20% above-the-line credit for large companies and some SMEs). This dual structure created complexity, errors, and opportunities for abuse.[3]
The merged scheme simplifies the landscape into a single regime based on the RDEC model. All companies — SMEs and large alike — now claim in the same way.
How the Merged Scheme Works
Under the merged scheme, qualifying R&D expenditure generates an above-the-line expenditure credit equal to 20% of the qualifying spend.[2]
Because the credit is treated as taxable income, the net benefit depends on the company’s Corporation Tax rate:
| CT Rate | Gross Credit | Tax on Credit | Net Benefit per £100 R&D Spend |
|---|---|---|---|
| 25% (main rate) | £20.00 | £5.00 | £15.00 |
| 19% (small profits rate) | £20.00 | £3.80 | £16.20 |
Above the line means the credit appears as income in the profit & loss account, above the Corporation Tax charge. This makes R&D relief visible to investors and lenders, and is beneficial for companies with losses or those in groups where the credit can be offset more flexibly.[2]
Enhanced Credit for R&D-Intensive SMEs
Loss-making SMEs whose qualifying R&D expenditure is 30% or more of total expenditure are classified as “R&D-intensive.” These companies can claim a higher payable credit.[1]
- The enhanced payable credit rate is 14.5% of the surrenderable loss
- Combined with the 20% expenditure credit, this gives an effective benefit of approximately 27% of qualifying spend
- The company must be loss-making in the relevant accounting period
- The 30% intensity threshold is tested each period
Tip: If your R&D intensity is close to the 30% boundary, careful categorisation of your total expenditure matters. Speak to a specialist adviser before claiming the enhanced rate.
Claim Notification Requirement
Since April 2023, companies must submit a claim notification form to HMRC if they are:[3]
- Claiming R&D relief for the first time
- Claiming after a gap — no claim was made in any of the preceding three accounting periods
The notification must be submitted within six months of the end of the accounting period for which you intend to claim. Miss this deadline and HMRC will reject the claim.
Transitional Rules
The merged scheme applies to accounting periods beginning on or after 1 April 2024. For periods straddling this date:[3]
| Scenario | Regime |
|---|---|
| AP begins before 1 April 2024 | Old SME or RDEC rules apply for the entire period |
| AP begins on or after 1 April 2024 | Merged scheme applies for the entire period |
There is no apportionment — the start date of the accounting period determines which regime applies.
Additional Information Form
All R&D claims must be accompanied by an additional information form, submitted digitally to HMRC. This form requires:[3]
- A brief description of each qualifying R&D project
- The field of science or technology involved
- The uncertainty the project sought to resolve
- Details of any agent or adviser involved in preparing the claim
This must be submitted before the CT600 that includes the R&D claim. HMRC will not process the claim without it. The claim itself is then made on the return — you can prepare and submit your CT600 online with HMRC-recognised software.
Frequently Asked Questions
What is the merged R&D scheme?
The merged R&D scheme is the single, unified R&D tax relief that replaced the separate SME and RDEC schemes from 1 April 2024. It provides a 20% above-the-line taxable credit for all companies.
How much is the R&D tax credit under the merged scheme?
The gross credit is 20% of qualifying R&D expenditure. Because the credit is taxable, the net benefit for a company paying the 25% main CT rate is 15p per £1 of qualifying spend.
What is an R&D-intensive SME?
A loss-making SME whose qualifying R&D expenditure is 30% or more of its total expenditure. These companies can claim an enhanced payable credit giving an effective benefit of approximately 27% of qualifying spend.
Do I need to submit a claim notification form for R&D relief?
Yes, a claim notification form is mandatory if you are claiming R&D relief for the first time or have not claimed in any of the preceding three accounting periods. It must be submitted within six months of the period end.
Further Reading
- R&D Tax Relief — what qualifies, documentation, and the claiming process
- The CT600 Tax Return — how to include R&D claims in your return
- Trading Losses — how losses interact with R&D credits
- Corporation Tax Rates — current rates and thresholds
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Sources
- Corporation Tax: Research and Development Tax Relief for small and medium-sized enterprises — GOV.UK
- Corporation Tax: Research and Development Expenditure Credit — GOV.UK
- Corporation Tax: Research and Development (R&D) relief — GOV.UK
- Guidelines on the meaning of research and development for tax purposes — GOV.UK