This track is for founders and early finance hires of a United Kingdom company that is loss-making or pre-revenue and is deciding whether, when and how to claim R&D tax relief. For accounting periods beginning on or after 1 April 2024 a loss-making SME has two possible reliefs: the merged R&D expenditure credit scheme, open to companies of any size, and enhanced R&D intensive support (ERIS), for loss-making SMEs that meet the R&D intensity condition. The UK also has a gate to diarise before a claim is even considered: a claim notification within 6 months of the end of the period of account for a first-time claimant. Both reliefs are administered by HM Revenue and Customs.
How the United Kingdom rules change the program
| Module | What is different in the United Kingdom | Country page |
|---|---|---|
| Is it worth claiming | Merged scheme: a 20% expenditure credit, taxable; for a loss-making company notional tax is deducted at the small profits rate (19 percent), giving a net benefit of 16.2 percent. ERIS: an extra 86% deduction (a total deduction of 186%) and a payable credit worth up to 14.5% of the surrenderable loss, a maximum cash benefit of 26.97 percent of qualifying expenditure. Payable credits are capped at £20,000 plus 300% of the company's relevant PAYE and National Insurance liabilities. | ERIS R&D intensive SME |
| Setting up from day one | The claim notification period runs from the first day of the period of account to the date six months after the last day of the period of account, so the first diary entry is set at incorporation. Every claim needs an additional information form that describes the R&D projects and breaks down the qualifying costs, so project records should show the advance sought, the uncertainties and how the work resolved them. | Claim notification |
| Funding interactions | For accounting periods beginning on or after 1 April 2024 the merged scheme contains no restriction for subsidised or grant-funded expenditure. The SME definition disregards certain venture capital and institutional investors in the linked enterprise test. | Merged scheme |
| Your first claim | Claim notification if required, additional information form before the return, then the claim in the Company Tax Return within 2 years of the end of the accounting period, in the CT600 with supplementary page CT600L. A payable credit requires the company to be a going concern according to its latest published accounts. | How to claim |
Forms and deadlines
| Form or step | Deadline or timing | Country page |
|---|---|---|
| Claim notification | If you are claiming for the first time or your last claim was more than 3 years ago, within 6 months of the end of the period of account. Where a claim notification is required and is not made within the claim notification period, the company is not entitled to make an R&D claim for the accounting period. | Claim notification |
| Additional information form | With every claim, before the Company Tax Return; otherwise HMRC will remove the R&D claim from the return. It requires the details of any agent who advised on the claim and the senior officer of the company responsible for it. | Additional information form |
| Company Tax Return (CT600 with CT600L) | Due 12 months after the end of the accounting period. Corporation Tax is due 9 months and one day after the end of the accounting period for companies not paying by instalments. | How to claim |
| The R&D claim | Must be made, amended or withdrawn within 2 years of the end of the accounting period it relates to. HMRC accepts late claims only in limited circumstances, where the delay was caused by circumstances beyond the company's control. | Deadlines |
Key rules to know
Which relief. ERIS is for loss-making SMEs whose relevant R&D expenditure is at least 30% of total relevant expenditure. An SME has fewer than 500 staff and either turnover not exceeding 100 million euros or a balance sheet total not exceeding 86 million euros, including linked and partner enterprises. An R&D intensive SME may elect to claim under the merged scheme instead.
How the ERIS cash is computed. The surrenderable loss is the lower of the unrelieved trading loss and the enhanced R&D expenditure, and the payable credit is 14.5% of the surrendered loss. A company with a small loss and large R&D spend surrenders less than its enhanced expenditure.
The cap that bites small payrolls. A company is exempt from the PAYE cap if its employees are creating, preparing to create or actively managing intellectual property and its expenditure on connected party EPWs and subcontractors is no more than 15 percent of its qualifying expenditure. Dividends are not staffing costs; only earnings, employer NIC and pension contributions of directors and employees qualify, so a dividend-only founder adds nothing to the PAYE figure that sets the cap.
Location. For accounting periods beginning on or after 1 April 2024, relief for contracted out R&D and externally provided workers is generally limited to work carried out in the UK; the restriction does not apply to the claimant company's own staffing costs. 65 percent of payments to an unconnected subcontractor for contracted out R&D qualify.
Worked example
Illustrative example. Fenwick Bio Ltd, a hypothetical SME with a first accounting period from 1 April 2025 to 31 March 2026, is pre-revenue. Qualifying expenditure £400,000 (own staff and consumables in the UK); total relevant expenditure £800,000, so intensity 50%; trading loss before relief £500,000; relevant PAYE and National Insurance £60,000.
| Step | Figures | Result |
|---|---|---|
| Setting up from day one | First claim, so a claim notification is due within 6 months of 31 March 2026 | Submitted by 30 September 2026 |
| ERIS deduction | 86% of £400,000 = £344,000; enhanced expenditure £744,000; loss after deduction £844,000 | Surrenderable loss: lower of £844,000 and £744,000 = £744,000 |
| Payable credit | 14.5% of £744,000 | £107,880, which is 26.97% of £400,000 |
| Cap check | £20,000 plus 300% of £60,000 = £200,000 | Not binding |
| Merged scheme comparison | 20% of £400,000 = £80,000 gross; net 16.2% for a loss-making company | £64,800, so ERIS is worth £43,080 more |
| Your first claim | Additional information form, then CT600 with CT600L filed in July 2026, well inside the 31 March 2028 claim deadline | Credit paid when the return is processed; £100,000 of loss carried forward |
Had Fenwick's PAYE and National Insurance been £20,000, the cap would have been £80,000 and £27,880 of the credit would not have been payable unless the intellectual property exemption applied.
Related country guide pages
Self-check questions
Answer each question, then open it to compare.
Your company is loss-making, an SME, and spends 45% of its total relevant expenditure on R&D. Which relief gives the larger cash benefit, and at what rate of qualifying expenditure?
A startup with a 31 December 2026 year end has never claimed. By what date must it submit a claim notification, and what happens if it misses that date?
A company with two employees on payroll and most of its R&D done by a connected contractor expects a large ERIS payable credit. What limits it?
The company received a grant for part of the project. Does the grant reduce the merged scheme claim?
The finance lead filed the Company Tax Return with the R&D claim but had not yet submitted the additional information form. What does HMRC do?
Official sources
Register interest in Startups and Scale-ups
Tell us where you claim and we will let you know when this program opens for your country.
Educational content only, not tax advice. See the disclaimer.