Current rates for accounting periods beginning on or after 1 April 2024: the merged scheme pays a 20% expenditure credit (worth 14.7p to 16.2p per £1 after tax), and ERIS pays loss-making, R&D-intensive SMEs up to 26.97p per £1. Not sure which applies? Start here.
How the numbers work
Merged scheme: a 20% credit is added above the line and then taxed, so £100,000 of qualifying spend gives a £20,000 gross credit worth £15,000 at the 25% rate, or £16,200 at 19%. Companies with augmented profits between £50,000 and £250,000 pay tax on the credit at the 26.5% marginal rate, which leaves £14,700. Loss-makers have notional tax deducted at 19% only, so the cash outcome is also £16,200 per £100,000. ERIS works differently: the additional 86% deduction takes the total to 186%, and a payable credit of 14.5% of the surrenderable loss produces up to £26,970 per £100,000 of qualifying spend, tax free.
Cost boundaries, subcontracting rules and the PAYE cap all change the outcome. A scoping conversation with a chartered adviser will give you a number you can plan around.
