The merged RDEC scheme gives UK startups a 20% credit on qualifying R&D expenditure. Loss-making R&D intensive startups can claim even more under ERIS. Here’s how it works — and how to claim.
R&D tax relief is an HMRC incentive that rewards UK limited companies for investing in research and development. If your startup is developing new products, processes, software or services that involve resolving scientific or technological uncertainty, you may be able to claim a significant tax credit — even if the project ultimately fails.
For accounting periods beginning on or after 1 April 2024, most UK companies claim under the merged RDEC scheme — a single, unified framework that replaced the old SME R&D scheme and the separate RDEC for larger businesses. The merged scheme provides a 20% above-the-line expenditure credit on qualifying R&D spend.
For early-stage, loss-making startups that are R&D intensive, there’s an even more generous option: the Enhanced R&D Intensive Support (ERIS) scheme, which can deliver an effective subsidy of approximately 27% of qualifying expenditure.
Many startups recover tens of thousands of pounds in R&D tax credits — extending runway without giving up equity. Pre-revenue companies can receive the credit as a direct cash payment from HMRC.
To claim R&D tax relief, your startup must be a UK limited company subject to Corporation Tax. The R&D activity must seek to achieve an advance in overall knowledge or capability in a field of science or technology — not just an advance for your business alone.
HMRC requires that a competent professional in the field could not easily deduce the solution. In practice, this means your work must involve genuine technological uncertainty — you didn’t know at the outset whether or how the challenge could be resolved.
You don’t need a lab or white coats. Most tech startup R&D claims are based on software development, systems engineering or product innovation. The project doesn’t need to succeed — HMRC rewards the attempt to resolve technological uncertainty, not just successful outcomes.
Since April 2024, there are two routes to R&D tax relief. Which one applies depends on your startup’s profitability and R&D intensity.
| Merged RDEC | ERIS | |
|---|---|---|
| Who claims | All UK companies (default) | Loss-making, R&D intensive SMEs only |
| Credit rate | 20% above the line | 14.5% payable credit on enhanced losses |
| Net benefit | ~15% to 16.2% per £1 of qualifying spend | ~27% effective subsidy per £1 |
| R&D intensity threshold | None | 30% of total expenditure must be qualifying R&D |
| Profit requirement | Profitable or loss-making | Must be loss-making |
| Cash payment | Yes, for loss-making companies (subject to PAYE/NIC cap) | Yes — higher payable credit |
| Subsidised expenditure | No restriction (grants, customer-funded R&D eligible) | No restriction |
A startup with £100,000 of qualifying R&D expenditure receives a 20% credit of £20,000. After Corporation Tax at 25%, the net cash benefit is £15,000 — equivalent to 15p per £1 spent on R&D. Startups paying the small profits rate (19%) retain approximately £16,200.
A loss-making startup with £100,000 of qualifying R&D expenditure that meets the 30% intensity threshold can claim an additional 86% deduction (£86,000), creating enhanced losses of £186,000. The 14.5% payable credit on those losses delivers approximately £27,000 in cash from HMRC.
Many early-stage startups — especially pre-revenue SaaS companies and deep-tech ventures — qualify for ERIS without realising it. We assess your R&D intensity at the start of every engagement and model which route delivers the best outcome.
Not all costs count. HMRC defines specific categories of qualifying expenditure for R&D tax relief claims. Understanding what’s eligible — and tracking it properly from day one — is critical to maximising your claim.
| Category | What’s Included |
|---|---|
| Staff costs | Salaries, employer NI contributions, and pension contributions for employees directly involved in R&D activities. This is typically the largest element of a startup claim. |
| Subcontractors | Costs paid to third parties for R&D work. Under the merged scheme, the company that contemplated or intended the R&D can claim — not the subcontractor. |
| Software & cloud computing | Licences, SaaS tools and cloud infrastructure (AWS, Azure, GCP) directly used in R&D activities. This is a strong qualifier for modern tech startups. |
| Consumable materials | Physical materials, components or prototypes consumed or transformed during R&D. |
| Utilities | Power, water and fuel used directly in R&D work. |
| Data costs | Datasets purchased or licensed specifically for R&D activities (e.g. training data for ML models). |
Not sure if your startup qualifies for R&D tax relief?
We’ll assess your eligibility, estimate the claim value and handle the entire HMRC submission.
R&D tax relief is claimed through your Corporation Tax return (CT600). It’s not a separate application — but the process involves technical documentation that HMRC scrutinises closely. Here’s how AccTek manages the end-to-end claim process for startup clients.
We review your projects, development sprints and technical work to identify activities that meet HMRC’s definition of qualifying R&D. This includes framing work in terms of scientific and technological challenges, not just commercial objectives.
We quantify all eligible costs — staff time allocated to R&D, cloud computing spend, subcontractor invoices, materials and software — and separate qualifying expenditure from business-as-usual costs.
HMRC requires a written description of the technological uncertainty, the advance sought, and how your work attempted to resolve it. We prepare this narrative to withstand HMRC enquiry — clearly articulating the baseline of knowledge, the uncertainty and the methodical approach.
Mandatory for all R&D claims since August 2023, the Additional Information Form provides HMRC with structured data about your claim. We submit this alongside the CT600.
If your startup is claiming R&D relief for the first time — or hasn’t claimed in the last three years — you must notify HMRC of your intention to claim within six months of the end of the accounting period. Missing this deadline means losing the claim entirely.
The claim is submitted with your CT600. For profitable companies, the credit offsets your Corporation Tax liability. For loss-making startups, HMRC pays the credit directly — typically within 4–8 weeks of a clean submission.
First-time claimants must notify HMRC within 6 months of the accounting period end. If your startup’s year end is 31 March 2026, the notification deadline is 30 September 2026. AccTek flags this proactively — we’ll never let you miss it.
R&D tax relief isn’t limited to biotech or pharmaceuticals. Many of the startups we work with claim successfully across a range of technology sectors.
Building a novel platform, developing proprietary algorithms, solving complex scalability or security challenges, or creating new approaches to data processing. This is the most common claim type for our startup clients.
Training models that push beyond current benchmarks, developing new architectures, resolving uncertainty in model performance or generalisation. Cloud computing costs for model training are a strong qualifier.
Building new payment processing systems, developing compliance automation, creating novel approaches to fraud detection or risk modelling.
Prototyping physical devices, developing embedded firmware, resolving manufacturing or materials science challenges.
If your agency builds bespoke technology platforms or develops novel technical solutions for clients (not routine implementation), the R&D element may qualify — particularly under the merged scheme’s updated subcontractor rules.
HMRC’s 2022 estimates found error and fraud rates of over 24% across SME R&D claims. The merged scheme was designed to tighten compliance. These are the mistakes we see most often — and help founders avoid.
AccTek isn’t an R&D tax relief mill. We’re your startup accountant — which means we already understand your technology, your finances and your growth stage. That context makes our R&D claims more accurate, more robust and more valuable.
Let AccTek identify, calculate and submit your R&D tax relief claim — built into your accounting, not bolted on.
AccTek Ltd is registered in England & Wales. ACA (ICAEW) qualified. All R&D tax relief guidance is based on HMRC rules current as of June 2026 and the merged RDEC scheme effective from 1 April 2024. Individual circumstances vary — contact us for personalised advice.
