If you are preparing your first R&D tax credit claim, there is a good chance the advice you are working from is out of date.
Ask around, and someone will tell you about “the SME scheme” — an enhanced deduction, up to 27p back for every pound spent, a straightforward corporation tax saving. For most companies, that scheme has gone. The merged R&D scheme replaced it for accounting periods beginning on or after 1 April 2024, which means almost every first-time claimant reading this in 2026 is claiming under rules that did not exist when half the articles on the subject were written.
The mechanics are different, the numbers are different, and there is now a deadline that can invalidate your claim before you have written a word of it.
One credit, above the line
Under the merged scheme there is a single R&D expenditure credit set at 20% of qualifying expenditure. Profit-making or loss-making, large or small, most companies now use the same mechanism.
Two things about that 20% catch first-time claimants out.
It is taxable. The credit is treated as income, so corporation tax is charged on it. At the 25% main rate, a 20% credit is worth roughly 15% of qualifying spend once tax is taken into account. At the 19% small profits rate, the net figure is closer to 16%. Useful money — but not the 27p in the pound still circulating online.
It sits above the line. The credit appears in your profit and loss account as income rather than as a reduction in your tax charge. That changes how your R&D activity shows up in your accounts, and it is a conversation worth having with your accountant before the year end rather than after it.
If you are loss-making and R&D-heavy, check ERIS
There is one meaningful exception. Enhanced R&D Intensive Support (ERIS) survives for loss-making SMEs whose qualifying R&D spend is at least 30% of total expenditure. Companies that qualify get an 86% additional deduction and a payable credit of 14.5% of the surrenderable loss — worth up to around 27% of qualifying spend.
That 30% threshold was lowered from 40%, and it catches more businesses than people expect. Early-stage engineering and software companies that spend most of their money on the technical team frequently clear it without realising. If you are loss-making, do the arithmetic properly rather than assuming you fall outside it.
The deadline that catches first-time claimants
This is the one that costs companies real money.
If you have never claimed before — or have not claimed in the previous three years — you must tell HMRC you intend to claim by submitting a claim notification form within six months of the end of the accounting period. Miss it, and your claim is not late. It is invalid. There is no appeal on the grounds that the R&D was genuine, the costs were real, or that nobody told you.
For a 31 December 2025 year end, that deadline was 30 June 2026. For a 31 March 2026 year end, it is 30 September 2026.
The form itself takes minutes, and it must be filed online — post and email are not accepted. The reason companies miss it is not difficulty. It is that they start thinking about R&D relief when they prepare the accounts, by which point the window has often closed. If you think you might have qualifying R&D in your current or most recent period, check that date before you do anything else. Two changes that work in your favour
Not all of it is tightening.
Subcontracting has flipped. Under the merged scheme, the company that decides to undertake the R&D and bears the risk is generally the one that claims — not the company carrying out the work. If you engage a specialist to solve a technical problem you defined, you are usually the claimant. The reverse applies too: if you carry out technical work to someone else’s specification, the relief may belong to them. Get this wrong in either direction, and you either lose relief you were entitled to or claim relief that is not yours.
The subsidised expenditure rule has gone. Grant funding used to push SME claimants into the much less generous RDEC scheme for an entire project. Under the merged scheme, grant-funded companies are treated like everyone else. If you held back from claiming because of an Innovate UK award or similar, it is worth looking again.
The offsetting restriction is location. Subcontracted R&D and externally provided workers must generally be UK-based, so offshore development that would once have qualified largely does not now.
Getting the first one right
First claims attract attention. HMRC has no track record to compare yours against, and the Additional Information Form — mandatory since August 2023 — gives them a structured description of your projects to test before anyone picks up the phone.
That is not a reason to avoid claiming. It is a reason to make the first one properly. A claim built on a clear technical narrative, costed accurately and filed on time is a straightforward piece of work. Claims assembled at speed from a template are where enquiries come from — and a first claim sets the tone for every one that follows it.
If you are weighing up a first claim, the most valuable thing you can do this month is check your notification deadline. The rest of it can be done carefully. That part cannot be done late.
Thinking about a first claim?
R&D tax legislation changes regularly, and the rules that apply depend on your accounting period and circumstances — this article is general information rather than advice for your situation. If you are working out whether you have a claim worth making, we are happy to talk it through.
Book a no-obligation call with John or Jason: www.vantagernd.co.uk/book
Alternatively, send us a brief overview of your projects for a free Loom video review: www.vantagernd.co.uk/review-your-project