Loss-making companies can still get cash from R&D.

Yes. For periods beginning on or after 1 April 2024, a loss-making company can receive a payment under either scheme. Under the merged scheme, the credit is set against Corporation Tax and other liabilities in a set order, and any balance is paid. Under ERIS, a payable credit is paid on the surrendered loss. The PAYE cap can limit the amount.

It depends on the numbers, and the choice is yours if you are eligible. The merged scheme gives a taxable 20% credit, about 16.2% net for a loss-making company. ERIS gives an 86% extra deduction and a 14.5% payable credit, which can reach about £26.97 per £100 of costs, but needs the 30% intensity test. We model both.

Under ERIS, instead of carrying the loss forward, the company exchanges part of it for a cash credit. The amount surrendered is the lower of 186% of qualifying costs and the trading loss, and the payable credit is 14.5% of that amount. It is a choice made in the claim, so it is worth modelling before filing.

A surrendered loss is used up, so it is no longer available to set against future profits. That is the trade: cash now against tax saved later. For a company that expects to be loss-making for years, cash now is often worth more. For one about to turn profitable, the answer may differ. We model both.

The cap limits the credit that can be paid to £20,000 plus 300% of the company's relevant PAYE and National Insurance liabilities for the period. A start-up with a small payroll and large outside costs can hit it. There is an exemption for companies creating or managing their own IP, if connected-party costs are no more than 15% of qualifying spend.

Then the position changes, and so does the best scheme. A profitable company usually uses the merged scheme, where the credit offsets Corporation Tax. Under the merged scheme, any credit blocked by the PAYE cap carries forward. We look at the likely path for the next few periods, not only the claim in front of us.

For ERIS, loss-making means a trading loss before the additional deduction, which is a tax computation concept, not simply what the accounts show. A company can report a loss in its accounts and still have a different tax position. We work from the tax computations and confirm the figure with your accountants.

Often, yes. The test compares relevant R&D expenditure with total relevant expenditure, and a pre-revenue company that spends mostly on R&D may pass. Connected companies' expenditure counts, and payments to them are excluded from the total. Our intensity checker gives a first view, and our marine robotics case study shows a pre-revenue example.

HMRC reported that 92% of claims were processed within 40 days in 2023-24, but that is a general figure, not a promise, and a claim that is queried takes longer. Payment can also be affected by other debts owed to HMRC. We tell you what to expect for your claim and plan the cash flow accordingly.

Yes. Under the merged scheme, the order of use includes other amounts the company owes HMRC before any balance is paid. If you have unpaid PAYE, VAT or other liabilities, some of the credit may go towards them. We check the position in advance, so you know what to expect.

Loss-making status is looked at for the company, but the intensity test brings in connected companies' expenditure, and group surrender rules apply to the merged scheme. A group can therefore get different results than the company alone. Our page on groups and connected companies explains the main points, and we look at the group as a whole.

Under the merged scheme, yes: the credit is a taxable receipt, and the notional tax at 19% for a loss-maker is why the net is about 16.2%. Under ERIS, the payable credit is not taxable. That difference is one reason the comparison matters, and why we show both side by side.

Then the detail matters. We check exactly what counts as relevant R&D expenditure and total relevant expenditure, including connected companies. There is also a grace period: the condition is met if it was met in the last 12-month period and a valid SME or ERIS claim was made on expenditure from 1 April 2023. The intensity checker shows the gap.

The same as any claim: the projects, the costs and the evidence, plus the figures for intensity if you use ERIS and the PAYE and National Insurance figures for the cap. The additional information form asks for the intensity details and the cost breakdown. We assemble them with your accountants.

Yes. Our R&D benefit calculator gives a first estimate under both schemes from your costs, losses and PAYE figures. It is simplified, so it leaves out groups and other HMRC debts, and it is not a promise of any amount. A call with us turns the estimate into a proper view of your own position.