R&D Tax Relief Regulations 2025
Merged RDEC & ERIS
You might be eligible for Research and Development (R&D) tax relief if your company makes investments in technology, innovation, or process enhancements. HMRC has made significant changes to the way R&D tax relief operates in the UK as of 1 April 2024. Two new schemes have taken the place of the previous RDEC and SME programmes:
● Integrated R&D Expenditure Credit (RDEC)
● ERIS (Enhanced R&D Intensive Scheme) plan
Taxaccolega discusses the implications of these changes for your company, who is eligible to make a claim, how much you stand to gain, and how to choose the best plan for you in this blog. What’s new in from April 2024?
The government has combined and simplified the prior R&D schemes. Now, depending on your company size and R&D intensity, you may claim under.
| Scheme | Who Can Claim | Benefit |
|---|---|---|
| Merged RDEC scheme | All UK companies doing R&D | 14.7% 16.2% from R&D (after tax) |
| ERIS Scheme | Loss making, R&D-intensive SMEs only | 27% of R&D cost in cash (tax-free) |
Table of Contents
For the majority of companies, the merged RDEC scheme
The merged R&D Expenditure Credit (RDEC) scheme is now the default for most UK businesses. 20% of your R&D expenditures may be credited if you are engaged in qualifying R&D work. It is included in your income, so it is taxed. Depending on your corporation tax rate your net benefit after taxes ranges from 14.7% to 16.2%.
✅ Principal attributes:
● Available to businesses of all sizes
● Suitable for businesses that make money as well as those that don’t
● Staff, supplies, and certain subcontractor expenses may be included
● Subject to a PAYE/NIC cap
For instance:
If your business invests £100,000 in eligible R& D:
● A £20,000 RDEC (20%) is given to you.
● The benefit is approximately £14,700 to £16,200 after taxes.
ERIS Scheme: The Enhanced R&D projects for R&D-intensive, loss-making SMEs
For SMEs that incur losses and invest significantly in research and development, the Enhanced R&D Intensive Scheme (ERIS) UK programme provides more advantages.
● If you are an SME (less than 500 employees and less than $100 million in turnover), you are eligible for ERIS.
● You’re causing losses.
● At least 30% of your overall business expenses go toward research and development.
If you qualify, you can surrender your loss for a 14.5% cash credit, which is entirely tax-free, after deducting 186% of your R&D expenses from your loss calculation.
For instance:
● If you spend £100,000 on R&D, you subtract £186,000 from your earnings.
Merged RDEC vs ERIS – Which Is Right for You?
| Scenario | Recommended Scheme | Why? |
|---|---|---|
| Profit-making company | Merged RDEC | ERIS not available for profit-makers |
| Loss-making, low R&D spend (<30%) | Merged RDEC | Doesn’t meet intensity requirement for ERIS |
| Loss-making, high R&D spend (≥30%) | ERIS (or Merged RDEC) | ERIS gives higher benefit, but you can opt out |
✅ Other Important Information
● PAYE Cap: The maximum amount for both plans is £20,000 + 300% of your R&D PAYE/NIC obligations.
● Overseas Costs: Northern Ireland businesses benefit from ERIS’s greater generosity, which permits claims for employees who work abroad.
● Grace Period: You might still be eligible for ERIS this year if you passed the R&D intensity test the previous year.
How Taxaccolega Can Assist
Our knowledgeable R&D tax advisors in Croydon are able to:
● Determine if your business is eligible for the combined RDEC or ERIS scheme.
● Review eligible R&D costs to maximise your claim.
● Manage all HMRC submissions and make sure the new regulations are followed.
● Assist you in applying for Advance Assurance, which guarantees your claim will be approved.
Whether you’re a big manufacturing company or a developing tech SME, R&D tax relief may provide substantial cash flow support.
We’re here to help you every step of the way.
Contact Us Right Now Taxaccolega: London Chartered Accountants Croydon, London
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