UK R&D Tax Relief: Merged RDEC & ERIS Guide 2026
Comprehensive 2026 guide to UK Research & Development (R&D) tax relief: the merged 20% R&D Expenditure Credit (RDEC), Enhanced R&D Intensive Support (ERIS) for eligible loss-making R&D-intensive SMEs, qualifying expenditure, claim notification, overseas restrictions and the mandatory Additional Information Form (AIF).
Executive Summary & The Merged 2026 R&D Scheme
For accounting periods beginning on or after 1 April 2024, the old SME R&D scheme and the old RDEC scheme were replaced by the merged R&D Expenditure Credit (RDEC) scheme, while Enhanced R&D Intensive Support (ERIS) provides SME-style relief for eligible loss-making R&D-intensive SMEs. The merged RDEC credit is generally 20% of qualifying expenditure and is taxable. ERIS provides an 86% additional deduction and a 14.5% payable tax credit on surrenderable loss, subject to the statutory conditions and limits.
R&D Scheme Structure Comparison
The table below outlines current R&D relief mechanisms available to UK limited companies:
| R&D Relief Scheme | Target Company Profile | Core Rate / Enhancement | Benefit / Key Limitation |
|---|---|---|---|
| Merged R&D Scheme (new RDEC) | Eligible companies, including large companies and SMEs, subject to the merged-scheme rules | 20% expenditure credit | Taxable credit; a 15% figure is only a simple post-tax illustration at a 25% CT rate |
| Enhanced R&D Intensive Support (ERIS) | Eligible loss-making R&D-intensive SMEs | 86% additional deduction + 14.5% payable credit | 26.97% is only the theoretical 186% × 14.5% maximum before surrenderable-loss and PAYE/NIC limitations |
| Contracted-out R&D | Company that contracts out qualifying R&D and satisfies the statutory conditions | Rate follows the applicable scheme | Only qualifying contracted-out R&D is claimable; contractual, connected-party and overseas rules apply |
Qualifying R&D Expenditure Categories
Potentially qualifying expenditure includes eligible employee staffing costs, employer secondary Class 1 NICs, qualifying pension contributions, software, data licences, cloud computing services and consumable items. Certain externally provided worker and contracted-out R&D costs can also qualify. Each category has detailed statutory conditions, and only the amount attributable to relevant R&D should be claimed.
Mandatory HMRC Additional Information Form (AIF)
The Additional Information Form (AIF) is mandatory for R&D relief and expenditure-credit claims. It must be submitted online before or on the same day as the Company Tax Return (CT600). If both are submitted on the same day, the AIF must be submitted first. If the CT600 is submitted without the required AIF, HMRC will not accept the R&D claim. The AIF requires technical project information, qualifying expenditure information and other claim details.
What R&D Qualifies for UK Tax Relief?
The tax definition of R&D is separate from the question of which expenditure qualifies. A project must seek an advance in science or technology through the resolution of scientific or technological uncertainty. The advance must be in the overall knowledge or capability in the relevant field, rather than merely an advance in the claimant company's own knowledge or capability. The work must also relate to the company's existing or intended trade.
ERIS: Intensity Test, Calculation & PAYE/NIC Cap
For accounting periods beginning on or after 1 April 2024, ERIS is available to eligible loss-making SMEs that meet the statutory R&D intensity condition, generally requiring relevant R&D expenditure to be at least 30% of the relevant total expenditure. The calculation can include expenditure of connected companies, so the test is not simply the claimant's R&D spend divided by its own total business expenditure. ERIS provides an 86% additional deduction and a 14.5% payable tax credit on surrenderable loss. The theoretical maximum payable-credit percentage of qualifying expenditure is 26.97% where the full 186% enhanced expenditure is surrendered, but the actual payment can be lower. The PAYE/NIC cap generally limits the payable credit to £20,000 plus 300% of relevant PAYE and NIC liabilities, with statutory exceptions and a proportionate £20,000 amount for accounting periods shorter than 12 months.
Claim Notification, AIF & CT600 Procedure
The claim process contains two distinct information requirements that should not be confused. Some companies must submit a separate R&D claim notification form, for example certain first-time claimants or companies whose last claim was made more than 3 years before the end of the claim notification period. The claim notification period generally runs from the first day of the period of account to 6 months after its end. Separately, every R&D relief or expenditure-credit claim requires the Additional Information Form (AIF). The AIF must be submitted before or on the same day as the CT600, with the AIF submitted first if both are filed on the same day.
Overseas R&D, Contractors & Externally Provided Workers
For merged RDEC and ERIS, overseas restrictions generally apply to contractor payments and externally provided worker (EPW) payments where the relevant R&D is undertaken overseas. An exception can apply where conditions necessary for the R&D are absent in the UK, present where the R&D is undertaken and it would be wholly unreasonable for the company to replicate those conditions in the UK. Conditions can include geographical, environmental, social, legal or regulatory conditions. The cost of the R&D and the availability of workers are not qualifying conditions for this exception. Special rules apply to companies registered in Northern Ireland claiming ERIS under the NI provisions, where overseas restrictions can be disapplied subject to a 3-year de minimis State aid limit.
Evidence, Case Law & Competent Professional Test
HMRC's definition of R&D for tax purposes requires more than a statement that a project was innovative or technically difficult. The claim should identify the scientific or technological advance, explain the uncertainty, describe the work undertaken to resolve it and show why the solution was not readily deducible by a competent professional. HMRC's current guidance also recognises judicial guidance, including BE Studios v Smith Williamson Ltd, and states that a competent professional's opinion is important evidence but is not automatically conclusive.
Important Transitional & Special Cases
The post-1 April 2024 rules do not mean that every historical R&D claim should be treated as a merged RDEC or ERIS claim. The applicable scheme depends on the accounting period and, for some expenditure, when the expenditure was incurred. Companies with accounting periods spanning the transition dates need to apply the relevant transitional rules. Capitalised revenue expenditure can also require specific treatment under the R&D rules. Companies registered in Northern Ireland have additional ERIS provisions from the relevant commencement date.