Every so often an engineering director asks us a version of the same question: after the reforms, the pre-notification, the extra forms and the HMRC scrutiny, are R&D tax credits still worth the effort? It is a fair question, and it deserves a straight answer rather than a sales pitch.
Our answer is: for some businesses, yes, clearly. For others, it needs a careful look first. Here is how we think about it.
What has actually changed
The previous split between the SME scheme and the Research and Development Expenditure Credit (RDEC) has been replaced by a merged scheme for accounting periods beginning on or after 1 April 2024. Within the merged scheme, two routes now apply to most small and medium-sized companies.
The first is the merged RDEC. Qualifying costs attract a taxable credit of 20% (correct as of October 2026). The second is Enhanced R&D Intensive Support (ERIS), aimed at loss-making companies with qualifying R&D spend of at least 30% of total expenditure. ERIS provides an additional 86% deduction, bringing the total to 186%, and a payable credit of up to 14.5% of the surrenderable loss. That credit is capped by reference to the company’s PAYE and National Insurance liabilities: £20,000 plus 300% of the relevant liabilities for the period (correct as at October 2026, per HMRC guidance).
For many companies, the headline benefit is lower than under the old SME scheme. Pre-2021 loss-making SMEs could recover up to 33% of R&D expenditure, but for many the PAYE cap limit introduced in 2012 reduced that cash benefit to £20,000. With the merged scheme, moving to RDEC meant some couldn’t even reach that cap for the same level of expenditure. Anyone who tells you nothing has changed is not reading the same rules we are.
The process has also become more demanding
Claims now come with an Additional Information Form (AIF) that must be submitted with the claim. Some companies must also notify HMRC in advance of their intention to claim. Technical details that used to be set out in a report on file now must be set out up front. HMRC has publicised its compliance activity in this area.
None of that is unreasonable. But it means a claim has a real cost in management time, and a weak claim carries more risk than it used to.
When it is usually still worth it
In our experience, the businesses that gain most from the scheme tend to share a few features:
· They are working on something where the outcome genuinely was not known at the start. A competent engineer could not have looked up the answer.
· They have meaningful qualifying costs: staff time on the technical work, subcontractors, consumables or software used in development.
· They can show how the work went. Test results, design iterations, failed approaches and the reasons for changing direction are what turn a claim into something defensible.
· They are willing to spend a few hours on discovery so the technical story is accurate.
Motorsport, advanced manufacturing, precision engineering and quantum technology businesses often fit this pattern. But so do software teams solving real technical problems, and many companies that would never describe themselves as ‘R&D’.
When it may not be
It is equally worth noting when the answer is less clear. If most of the work is routine application of established methods, the claim is likely to be thin. If qualifying costs are small, the benefit may not justify the preparation. If there is little record of what was tried and why, the evidence may not support the claim HMRC would expect to see. And if a claim only works by stretching what counts as R&D, that is a risk to the business, not a saving.
Sometimes the honest advice is to claim a smaller, well-evidenced amount, or to wait until the company has better records. Occasionally, the advice is not to claim at all.
How we approach it
We are engineers first. John and Jason understand the work, so we can quickly tell whether a project genuinely involved technological uncertainty or was good, hard engineering that falls outside the definition. That distinction is what the relief turns on, and it is what HMRC tests.
In practice, we aim to keep the burden on you low. There are no templates to complete: we take costs directly from your accounting software, write the technical narrative with you, and prepare the AIF. After submission, we monitor your HMRC account and notify you of any repayments or adjustments. Our fees are a fixed base plus a modest success element, and we will tell you before we start if we think a claim is unlikely to be worthwhile.
We cannot promise an outcome, and nobody can. What we can do is give you a clear view of what qualifies, what the evidence supports, and what the process will involve, so you can decide with the facts in front of you.
A practical next step
If you are considering this, the quickest way to get a view is to send us a brief overview of your recent technical projects. John will review it and record a personal Loom video with honest feedback. It is free, with no obligation or pressure.
Send us a brief overview of your projects for a free Loom video review: www.vantagernd.co.uk/review-your-project/
Or, if you would prefer to talk it through, book a no-obligation call with John or Jason: www.vantagernd.co.uk/book/
This article is general information, not tax advice. R&D tax rules and rates can change, and the figures above are correct at October 2026. Please seek professional advice on your own circumstances.