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Innovation Tax Reliefs

 

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HMRC provide a number of financial reliefs or incentives to encourage businesses to invest in innovation. These include:

R&D Tax Reliefs provide valuable tax deductions for businesses investing in eligible research and development activities. Small and medium-sized enterprises (SMEs) can benefit under the SME scheme, while larger companies may qualify through the Research and Development Expenditure Credit (RDEC) scheme. Collectively, these are often referred to as R&D tax credits.

From 1 April 2024, HMRC has merged the existing SME and RDEC schemes into a single, streamlined R&D Expenditure Credit (RDEC) system, with enhanced support for R&D-intensive SMEs (ERIS). While the qualifying expenditure rules remain the same, the calculation and tax treatment differ.

Learn more about the new RDEC scheme and the ERIS support for R&D-intensive SMEs.

Innovation Tax Reliefs

👉 Worried about missing a deadline? Try our new R&D Tax Deadlines Tool to keep your claims on track!

 

Under the new scheme:

  • A lower notional tax restriction is applied at step 2 of the payment process for small profit-making and loss-making businesses.
  • A more generous PAYE cap is available, making the relief more accessible.

🔢 Use our R&D Tax Relief Calculator to estimate your potential claim.

 

The table below outlines the potential tax savings available under each scheme.

SME Scheme RDEC Scheme Merged Scheme - RDEC ERIS for SME's
Up to 31/03/23 From 01/04/23 Up to 31/03/23 From 01/04/23 Periods from 01/04/24 Periods from 01/04/24
Profitable company 130% uplift on costs = 24.7% net benefit 86% uplift on costs = 21.5% net benefit Headline rate 13% = 10.5% post tax rate Headline rate 20% = post tax rate 14.7% - 16.2%* Headline rate 20% = post tax rate 14.7% - 16.2%* Not applicable
Loss making company Costs + 130% uplift = 230 x 14.5% credit = 33.4% subsidy Costs + 86% uplift = 186 x 10% credit = 18.6% subsidy 10.5% subsidy 15% subsidy 16.2% subsidy Not applicable
Loss making R&D Intensive Not applicable Costs + 86% uplift = 186 x 14.5% credit = 26.97% subsidy Not applicable Not applicable Not applicable Costs + 86% uplift = 186 x 14.5% credit = 26.97% subsidy
*Post tax rate depends on whether the 19% or 25% corporation tax rate (or marginal relief) applies.

SME SCHEME

Profitability:

15% net costs (85% uplift) 

Loss making:

30% costs (130% uplift) 

R&D intensive:

Not applicable 

 

RDEC SCHEME

Profitability:

 13.5% post headline rate (14.5% - 1%) 

Loss making:

 14.5% subsidy 

R&D intensive:

 Not applicable 

MERGED SCHEME

Profitability:

14.7% headline rate 

Loss making:

15% subsidy

R&D intensive:

Not applicable 

ENHANCED R&D

Profitability:

Not available

Loss making:

R&D costs 86% + 14.5% cash back

R&D intensive:

Costs 86% subsidy 

 

Contact Us

How can we help?

At TAP we provide HMRC-compliant R&D Tax Credit services tailored to innovative businesses. We offer a unique blend of technical expertise, experience, and a delivery approach where the client’s needs are our priority.

We work with owner managed businesses and private equity backed groups, together with large international and quoted groups.

Working across the UK and leveraging our international network, we can bring the latest tax opportunities based on evolving tax legislation and HM Revenue & Custom’s (HMRC) approach.

We have brought together a number of detailed webpages that should help you if your business is involved in creating intellectual property, developing techniques to improve efficiencies or working on developing ground-breaking ideas in your sector. Our pages will help you determine if your R&D activities are likely to qualify for tax relief and our R&D Tax calculator should help you quantify the amount that may be available to you.

If you are considering investment in R&D our team can help you understand what types of expenditure will be allowed and the best way to organise your accounting processes to ensure your claim is successful.

Innovation Tax Reliefs Team

Meet the talented individuals behind our success! Our team is driven by innovation, expertise, and a shared passion
Aidan James
Partner
Dan Howse
Partner
Helen Mallalieu
Partner
Jamie Favell
Partner
Jay Yoganathan
Partner
Michael Bull
Partner
Russ Cahill
Partner
Scott Wickham
Partner
Sophia Watsham
Partner
Robert Astley
Family Office Partner
Charlotte Davies
US Tax Director
Grace Bonse
R&D Tax Director
Ian Feaviour
US Tax Director
Rachel Alabaster
Private Client Tax Director
Richard Middleditch
Private Client Tax Director
Sucheta Thomas
Private Client Tax Director
Zohra Bala
Corporate Tax Director
Paul Spenceley
Tax Consultant
Carmen Shippey
US Tax Senior Manager
Nick Townend
Private Client Senior Tax Manager
Paul Flannery
US Tax Senior Manager
Sydnie Payne
Private Client Senior Tax Manager
Thomas Quinn
Corporate Tax Senior Manager
Toyan Williams
Corporate Tax Senior Manager
Ben Greenwood
Private Client Tax Manager
Hemma Chana
US Tax Manager
Jeethu Job
US Tax Manager
Nicky Hutchison
Accounts and Finance Manager
Oliver Baker
Accounts Manager
Olivia Denton
Corporate Tax Manager
Martin Sevtsov
Marketing Coordinator
Rachel Ezrachie
Office and Operations Manager
Sophie Richards
Office and HR Manager
Alice Lin
Corporate Tax Assistant Manager
Alina Miron
US Tax Assistant Manager
Alister Gracias
Private Client Tax Assistant Manager
Amy Johns
US Tax Assistant Manager
Danica Owen-Davidson
Private Client Tax Assistant Manager
Darshini Dayanand
US Tax Assistant Manager
Hassam Ali
Corporate Tax Assistant Manager
James Fothergill
Corporate Tax Assistant Manager
Jay Patel
Private Client Tax Assistant Manager
Emma Beattie
Accounts Preparer
Charlie Hill
Private Client Tax Senior
Elias Cox
Corporate Tax Senior
Hashmat Choudhry
US Tax Preparer
Hugo Costain
Private Client Tax Senior
James Davies
Corporate Tax Senior
Jess Bonner
Senior US Administrator
Talia Lockwood
Corporate Tax Senior
Ben Warner
Corporate Tax Assistant
Laiba Khan
Corporate Tax Assistant
Mathew Valliath
UK Private Client Tax Trainee
Vishnupriya Balakrishnan
UK Private Client Tax Trainee
View the entire team
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Our Clients Love us

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Our company has engaged with Tax Advisory Partnership on R&D activities. Their service has been solution oriented, proactive, and good value for money. We have developed a good relationship with Tax Advisory Partnership and find their R&D consultants to be good listeners. I would highly recommend Tax Advisory Partnership for their knowledge of the regulations and the ongoing support they offer.
CFO of a major F1 motorsport company
Our company has engaged with Tax Advisory Partnership on R&D activities. Their service has been solution oriented, proactive, and good value for money. We have developed a good relationship with Tax Advisory Partnership and find their R&D consultants to be good listeners. I would highly recommend Tax Advisory Partnership for their knowledge of the regulations and the ongoing support they offer.
CFO of a major F1 motorsport company

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