R&D benefit calculator

It adds up your qualifying costs, applies the merged scheme's 20% expenditure credit, then deducts the notional tax on that credit. If you are loss-making and eligible, it also models ERIS. It then applies the PAYE and NIC cap and shows the result side by side, with a per-£100 figure for easy comparison.

Because that is the rate of the expenditure credit under the merged scheme for accounting periods beginning on or after 1 April 2024, as set out in HMRC's guidance. A different rate applies to ring-fenced trades, which the calculator does not model. The rate itself is a fixed input, not something you choose.

Under the merged scheme the credit is a taxable receipt of the trade. The law deals with that by deducting notional tax from the credit: at the main rate, 25%, if the company has main-rate profits, otherwise at the small profits rate, 19%. That is why the net benefit is less than 20% of costs.

Because notional tax is charged at the small profits rate, 19%, where a company does not have profits chargeable at the main rate. A loss-making company has none, so 19% applies. The net benefit is 20% less 19% of that credit, which is 16.2% of qualifying costs. The rate depends on the profits, not on the size of the company.

A company with main-rate profits has the credit reduced by notional tax at 25%, giving a net benefit of 15% of qualifying costs, which is 20% less 25% of the credit. This is our arithmetic from the rates in the law. HMRC's own summary of the government position is between £15 and £27 for every £100, across both schemes.

The main rate, 25%. Notional tax is at the main rate wherever the company has profits chargeable at the main rate, ignoring the credit. HMRC's manual, CIRD112100, confirms that a company able to claim marginal relief still has such profits. So the calculator shows a net benefit of 15% of qualifying costs, even though the company's effective Corporation Tax rate is lower.

For unconnected externally provided workers and unconnected subcontractors, only 65% of the payment counts as qualifying cost. For connected ones, the lower of the payment or the provider's relevant costs applies. Only the company that decides the R&D needs doing can claim the contracted-out costs. Connected parties follow a different rule, so tell us if any are involved.

ERIS gives an extra 86% deduction, so 186% of qualifying costs in total, and the company can surrender the lower of 186% of its qualifying costs and its trading loss for a payable credit of 14.5%. The credit is not taxable. The calculator applies this only where you say the company is eligible.

Because a company can only surrender a loss it actually has. The surrenderable amount is the lower of 186% of the qualifying costs and the trading loss before the additional deduction. If the loss is smaller than 186% of the costs, the loss is the limit. The tool shows which figure applies.

It is the maximum ERIS can pay per £100 of qualifying costs: 186% multiplied by 14.5%. It is our arithmetic from the published rates. It is reached only when the company has a large enough loss to surrender the full 186%, and before the PAYE cap is applied. Your own figure will usually be lower.

The payable credit is capped at £20,000 plus 300% of the company's relevant PAYE and NIC liabilities for the period. The £20,000 is reduced pro rata for short periods. You enter the PAYE and NIC figure, and the calculator shows how much is paid and how much is limited. Short periods are pro-rated.

When the company is creating, preparing to create or managing its own intellectual property, with the activity wholly or mainly done by its employees, and payments for connected-party externally provided workers and contractors are no more than 15% of qualifying expenditure. If you say you meet both parts, the calculator removes the cap.

It is carried forward to the next accounting period, according to HMRC's guidance. The calculator shows the amount carried forward. Whether any excess ERIS credit carries forward is not confirmed to our satisfaction, so for ERIS we say speak to us rather than show a figure. Credit not paid now is not lost.

The calculator does not model it. Periods beginning before 1 April 2024 fall under the older SME and RDEC schemes, which have different rates and rules, and they remain relevant for late claims, amendments and enquiries. Speak to us and we will work out the position for the period. That is a different calculation.

Group surrender, credits set against other periods or other HMRC debts, ring-fenced trades, overseas costs, the question of whether your projects qualify at all, and the effect of grants. It is a simplified estimate to show roughly what a claim might be worth, not a computation of your claim. Ask us about any of these.