What are R&D tax credits?

Research and development (R&D) tax credits are a UK government incentive designed to encourage businesses to invest in technological and scientific advancement. They do this by providing financial benefits and tax incentives to eligible businesses that engage in R&D activities. 

These credits typically cover the expenses related to research and development such as: 

• Staff pay costs
• Supplies and equipment
• Subcontractor payments

Prior to April 1st 2024 the R&D initiative consisted of two main schemes: the SME scheme and RDEC. (Research and Development Expenditure Credit)

If a company’s accounting period begins before or after April 1st 2024, then their R&D tax credit claim falls under the new merged scheme, which was formed to simplify the process. Loss-making, R&D-intensive SMEs may instead access Enhanced R&D Intensive Support (ERIS), which offers a higher effective cash benefit where a significant share of total company spend goes into R&D.