Position depends on when the accounting period begins, tax position and R&D intensity. The 30% ratio includes connected companies.
The R&D scheme that applies to your company depends first on when your accounting period began. Periods beginning on or after 1 April 2024 fall under the current system: the merged scheme for most companies, or Enhanced R&D Intensive Support (ERIS) for loss-making, R&D-intensive SMEs. Periods that began before 1 April 2024 remain under the old SME and RDEC schemes, and many can still be claimed by amendment until the final deadlines around 30 and 31 March 2027.
Start with the accounting period, not the calendar
The test is the date your accounting period began. A 12-month period that began on 1 March 2024 sits entirely under the old schemes, even though eleven of its twelve months fall after the changeover date.
Two common year ends show how this plays out. A company with a 31 March year end moved to the current schemes with its year beginning 1 April 2024. A company with a 31 December year end stayed on the old schemes for the whole of 2024, and its first current-scheme period was the year beginning 1 January 2025.
The decision in three questions
1. Did the accounting period begin on or after 1 April 2024?
If no, the old SME and RDEC schemes apply to that period. Skip to the section below and see our guide to backdated R&D claims. If yes, continue.
2. Is the company profitable or loss-making for the period?
If profitable, the merged scheme applies: a 20% taxable credit worth 15p per £1 at the 25% main corporation tax rate, or 16.2p where the 19% rate applies. If loss-making, continue.
3. Is the company an SME spending at least 30% of its total expenditure on R&D?
An SME here means fewer than 500 staff and either turnover under €100m or a balance sheet under €86m, with connected and partner enterprises aggregated. The 30% intensity ratio compares relevant R&D expenditure with total relevant expenditure, and connected companies count on both sides of the calculation.
If yes to both parts, ERIS applies: a payable credit worth up to 26.97p per £1 of qualifying spend. If no to either, the merged scheme applies, and as a loss-maker you receive 16.2p per £1 in cash.
The same outcome in one table:
| Accounting period began | Position | Scheme | Worth per £1 of qualifying spend |
|---|---|---|---|
| On or after 1 April 2024 | Profitable | Merged scheme | 15p at the 25% rate; 16.2p at the 19% rate |
| On or after 1 April 2024 | Loss-making, not R&D-intensive or not an SME | Merged scheme | 16.2p, paid in cash |
| On or after 1 April 2024 | Loss-making SME, R&D at 30% or more of total expenditure | ERIS | Up to 26.97p, paid in cash |
| Before 1 April 2024 | Any | Old SME scheme or old RDEC | Historical rates, table below |
To put numbers on your own position, use the claim value calculator; to test the 30% threshold properly, including connected companies, use the ERIS intensity calculator.
What are the current schemes worth on £100,000 of spend?
On the standard worked example of £100,000 of qualifying expenditure: the merged scheme pays a £20,000 gross credit, worth £15,000 net at the 25% corporation tax rate and £16,200 at the 19% rate or for loss-makers. ERIS pays £100,000 x 186% x 14.5% = £26,970 in cash, assuming sufficient losses. The gap between £16,200 and £26,970 is why the intensity test deserves attention before year end, not after it.
What if your period began before 1 April 2024?
The old schemes apply, and they can generally still be claimed by amending the tax return for roughly two years from the end of the accounting period. The final standard amendment deadline for old-scheme periods falls around 30 and 31 March 2027. After that, the old schemes are history.
The historical rates, for reference only:
| Scheme | Expenditure incurred | Historical mechanics |
|---|---|---|
| Old SME scheme | Before 1 April 2023 | 130% additional deduction; losses surrenderable for a 14.5% credit |
| Old SME scheme | From 1 April 2023 | 86% additional deduction; 10% surrender rate, or 14.5% if R&D-intensive |
| Old RDEC | Before 1 April 2023 | 13% taxable credit |
| Old RDEC | From 1 April 2023 | 20% taxable credit |
Do not rely on these rates for current periods; a surprising amount of online content still presents them as live. The old SME scheme also restricted claims where a project was grant-funded or otherwise subsidised, a rule the current schemes have abolished. If a grant is in your history, read grant funding and R&D tax relief before assuming anything.
Whether a backdated claim is worth making, and how the mechanics work, is covered in backdated R&D claims and the March 2027 deadline.
The claim notification trap
One requirement cuts across every scheme and silently kills claims. For accounting periods beginning on or after 1 April 2023, a company claiming for the first time, or one that has not claimed in the previous three years, must notify HMRC within six months of the end of the period of account. Miss the window and the claim is invalid, even where the amendment deadline is still open.
There is a wrinkle that matters for backdated claims: amendments filed after 1 April 2023 for earlier periods do not count as prior claims for this test, so a company that thinks of itself as an existing claimant may still need to notify. The full detail is in the R&D claim notification requirement.
Can a company move between ERIS and the merged scheme?
Yes, and many will. The scheme is determined period by period: profitability and the 30% intensity ratio are retested each year, so a company can claim ERIS one year and the merged scheme the next as its finances change. A one-year grace period protects a company that qualified for ERIS and then dips below 30% intensity, but beyond that the movement is automatic.
For companies near the boundary, this is a forecasting question. The difference is £10,770 of cash on every £100,000 of qualifying spend (£26,970 against £16,200), so decisions that shift the intensity ratio, such as scaling a commercial team, have a tax cost worth knowing about in advance.
Get the scheme right before anything else
Every downstream judgement, from rates to grant interactions to the treatment of subcontractors, depends on which scheme and which period you are in. It is also one of the first things HMRC looks at: roughly one in six R&D claims is checked, and a claim built on the wrong scheme fails at the first hurdle. Our guide to HMRC R&D enquiries explains what a check involves and how defensible preparation differs.
If you would rather settle the question in one conversation, talk it through with a chartered adviser. LimestoneGrey is a firm of chartered tax advisers and chartered accountants specialising in R&D tax relief regulated by ICAEW, and every claim is signed off by a chartered adviser. Get in touch, or start from the full R&D tax relief guide.
Written by Matthew Jones ACA CTA. Last reviewed July 2026.
Sources
- Merged scheme & ERIS guidance — the current schemes: the 20% merged credit and ERIS.
- R&D relief for SMEs — the SME definition and the old SME rates of 86% / 10% / 14.5%.
- Work out your R&D tax relief — the historical RDEC rates of 13% then 20%, and SME rates.
- Merged scheme RDEC reform (policy paper) — the merged scheme applying from 1 April 2024.