Methodology and sources
This page lists every figure the calculator uses, where it came from, and what the tool deliberately does not model. If a number on this site is not on this page, it is a bug.
Rates in use
All rates were last verified on 2026-08-14 against primary HMRC and GOV.UK sources. They apply to accounting periods beginning on or after 2024-04-01, when the merged RDEC scheme and enhanced R&D intensive support replaced the old RDEC and SME schemes.
| Figure | Value | Source |
|---|---|---|
| Merged RDEC expenditure credit | 20% | HMRC merged scheme guidance |
| ERIS additional deduction | 86% (186% total) | HMRC merged scheme guidance |
| ERIS payable credit | up to 14.499999999999998% of surrenderable loss | HMRC merged scheme guidance |
| R&D intensity threshold | 30% of total expenditure | CIRD82150 |
| PAYE cap | £20,000 plus 300% of PAYE and NIC | CIRD140000 |
| Corporation Tax main rate | 25% on profits over £250,000 | GOV.UK Corporation Tax rates |
| Corporation Tax small profits rate | 19% on profits of £50,000 or less | GOV.UK Corporation Tax rates |
How the calculation works
Merged RDEC scheme
Gross credit is qualifying expenditure multiplied by 20%. Because HMRC classes this credit as trading income, it is liable to Corporation Tax, so the net figure shown is the gross credit multiplied by one minus your Corporation Tax rate. Where the PAYE cap applies, the credit is restricted to the cap and the excess is reported separately as carried forward.
Enhanced R&D intensive support
The additional deduction is qualifying expenditure multiplied by 86%. The surrenderable loss is the lower of your unrelieved trading loss and 186% of qualifying expenditure. The payable credit is the surrenderable loss multiplied by 14.5%. This credit is not liable to Corporation Tax, so no tax is deducted from it. Where the PAYE cap applies the credit is restricted, with no carry forward.
Scheme selection
The calculator routes you to ERIS only when all three conditions hold at once: the company meets the SME definition, it is loss-making for tax purposes before the additional deduction, and relevant R&D expenditure is at least 30% of total expenditure. Otherwise it applies the merged RDEC scheme.
Assumptions and limits
- Marginal Relief is not computed. Profits between £50,000 and £250,000 attract Marginal Relief, giving an effective Corporation Tax rate between 19% and 25%. Calculating it needs augmented profits, the number of associated companies and the length of the accounting period, none of which this tool collects. Use HMRC's Marginal Relief guidance for that band.
- Trading loss defaults to the maximum. If you leave the unrelieved trading loss field blank, the calculator assumes the loss is at least 186% of qualifying spend, which produces the largest possible payable credit. It says so on the result.
- The PAYE cap is skipped when unknown. Leave the PAYE and NIC field blank and no cap is applied. Your real credit may be lower.
- Northern Ireland ERIS is out of scope. SMEs with a registered office in Northern Ireland follow separate provisions and are not subject to the overseas contractor and externally provided worker restrictions. See HMRC's Northern Ireland ERIS guidance.
- Ring-fenced trades are out of scope. Oil, gas and mining trades have their own expenditure credit rates.
- Eligibility is assumed, not tested.The calculator does not judge whether your project meets HMRC's definition of R&D. That test comes first and it is where most rejected claims fail. See the HMRC definition.
Review schedule
R&D relief rates change at UK fiscal year boundaries and whenever HMRC republishes its guidance. This site is reviewed at each 1 April and whenever the merged scheme guidance shows a new update date. The HMRC merged scheme page was last updated on 8 January 2026 at the time of our last check.
| Date checked | Outcome |
|---|---|
| 2026-08-14 | All rates confirmed against HMRC sources. No changes since the 8 January 2026 guidance update. |
Corrections
If a figure here is wrong or out of date, it should be fixed rather than argued about. Report it via the details on the about page and include the HMRC source that contradicts it.