---
name: gb-tax-relief-under-the-merged-scheme
description: "A drafting guide to the merged scheme R&D expenditure credit (RDEC) for UK companies with accounting periods beginning on or after 1 April 2024, covering the credit rate, the PAYE cap, the notification and claim process, and the payment steps."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/gb-tax-relief-under-the-merged-scheme"
  jurisdiction: "GB"
  tax_year: "2026"
  last_updated: "2026-09-03"
  review_status: "pending_review"
---

# R&D tax relief under the merged scheme (RDEC) for accounting periods from April 2024 in United Kingdom

## R&D tax relief under the merged scheme (RDEC) for accounting periods from April 2024 in United Kingdom

The merged scheme R&D expenditure credit (RDEC) is an above-the-line, taxable credit claimed by companies on their Company Tax Return for qualifying research and development expenditure. HMRC states that the merged scheme RDEC and enhanced R&D intensive support (ERIS) replace the old RDEC and small and medium-sized enterprise (SME) schemes for accounting periods beginning on or after 1 April 2024. Figures are for tax year 2026. HMRC expresses the rules by reference to the accounting period, not the tax year, so the operative test is when the accounting period began; the merged scheme guidance page was last updated 8 January 2026.

## Who this is for

Companies within the charge to Corporation Tax that incur qualifying R&D expenditure in an accounting period beginning on or after 1 April 2024. HMRC's guidance states that profit-making and non-R&D intensive SMEs with qualifying R&D expenditure can claim relief under the merged RDEC scheme, and that a company eligible for ERIS may choose instead to claim under the merged RDEC scheme, but cannot claim under both schemes for the same expenditure.

This Guide does not cover accounting periods beginning before 1 April 2024, which fall under the old RDEC and SME schemes. It does not cover the ERIS calculation in detail, the Northern Ireland ERIS provisions, or the rates that apply to ring-fenced trades — HMRC states only that different rates apply to ring-fenced trades, and this Guide does not state those rates because they were not on the pages read.

## Rates, thresholds and deadlines

### Merged scheme RDEC: rate, cap and treatment

**Merged scheme RDEC: rate, cap and treatment**  _(https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support |
| Start of the merged scheme | accounting periods beginning on or after 1 April 2024 | The page states the merged scheme RDEC and ERIS "replace the old RDEC and small and medium-sized enterprise (SME) schemes" from that point |
| Merged scheme RDEC rate | 20% | "The rate of R&D expenditure credit under the merged RDEC scheme is 20%" |
| Ring-fenced trades | different rates apply | The page states "Different rates apply to ring-fenced trades" without giving the rates on this page |
| PAYE cap | £20,000 plus 300% of the company's relevant PAYE and National Insurance contributions liabilities for the period | Section on the PAYE cap; the page cross-refers to CIRD140000 |
| Credit received in the period | cannot exceed the PAYE cap for that period, unless exempt from the cap | Applies in either the merged RDEC scheme or ERIS |
| Excess over the PAYE cap (merged RDEC) | carried forward as an R&D expenditure credit claimable in the next accounting period | Merged scheme treatment of the excess |
| Tax treatment of the credit | liable to Corporation Tax as it is classed as trading income | The credit is a taxable expenditure credit |
| ERIS additional deduction | an extra 86% of qualifying costs, on top of the 100% already in the accounts, to make a total 186% deduction | ERIS section; ERIS is only for loss-making R&D intensive SMEs |
| ERIS payable tax credit | worth up to 14.5% of the surrenderable loss | ERIS section; the credit is not liable to tax |

### Working out the credit

**Working out the credit**  _(https://www.gov.uk/guidance/work-out-your-research-and-development-tax-relief)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/guidance/work-out-your-research-and-development-tax-relief |
| Merged scheme calculation | multiply the total qualifying costs by 20% to get the expenditure credit amount | "Multiply the figure by 20% to get the expenditure credit amount" |
| Limit on the credit received | the expenditure credit amount received in the accounting period cannot exceed the PAYE cap, unless exempt | The page refers to the merged scheme and ERIS guidance for what happens if the credit exceeds the cap |

### The payment steps

**The payment steps**  _(https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird112100)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird112100 |
| Step 2 notional tax rate — main rate profit makers | the main rate of Corporation Tax | "For companies with profits chargeable to the main rate of CT before the RDEC is accounted for, the main rate of CT"; a company benefiting from marginal relief still has profits chargeable at the main rate |
| Step 2 notional tax rate — ring fence trades | substitute "main ring fence profits rate" for "main rate" and "small ring fence profits rate" for the "small profits rate" | The manual states the substitution but this Guide does not state the numeric rates, which were not on the page read |
| Step 3 PAYE cap amount | £20,000 plus 300% of the company's relevant PAYE and NIC liabilities | "The amount of the PAYE cap (CTA09/S1112B) is £20,000 plus 300% of the company's relevant PAYE and NIC liabilities" |
| Step 3 excess (merged RDEC) | deducted and treated as an amount of credit to which the company is entitled for the next accounting period (CTA09/S1042J) | No new claim to a gross RDEC in the subsequent period is needed for the entitlement to arise |
| Step 4 | remaining amount applied in discharging any liability of the company to pay Corporation Tax for any other accounting period | Step 4 — discharge of CT liability for other period(s) |
| Step 5 | a group member may surrender the whole or part of any amount remaining after step 4 to another group member (CTA09/S1042N) | Group surrender step |

### Notifying HMRC and claiming

**Notifying HMRC and claiming — claim notification form**  _(https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief |
| Start of the claim notification period | the first day of the 'period of account' | "starts on the first day of the 'period of account'" |
| End of the claim notification period | 6 months after the end of the 'period of account' | "ends 6 months after the end of the 'period of account'" |
| Effect of missing the notification period | the R&D tax relief claim will be invalid | "You must submit the form within certain dates known as the 'claim notification period'. If you do not, your R&D tax relief claim will be invalid" |
| Alternative to the notification form | send the claim on the Company Tax Return, or as an amendment, so it is received by the last date of the claim notification period | Applies where a previous claim was made more than 3 years before the last date of the notification period, or where an exception applies |

### Notifying HMRC and claiming

**Notifying HMRC and claiming — additional information form**  _(https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief |
| Additional information form | one form for each accounting period claimed | "You need to complete an additional information form for each accounting period you're claiming" |
| Period of account longer than 12 months | an additional information form for the first 12-month accounting period, and a further form for the following short accounting period | Example given: a 16-month period of account means 2 tax returns and, if claiming for both, forms for both periods |
| Accounting period dates on the form | must match the dates shown in the Company Tax Return | Where a mean accounting date election is made, use the mean start and end dates on both the form and the return |

### Notifying HMRC and claiming

**Notifying HMRC and claiming — Company Tax Return**  _(https://www.gov.uk/guidance/make-a-claim-for-rd-tax-relief-on-your-company-tax-return)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/guidance/make-a-claim-for-rd-tax-relief-on-your-company-tax-return |
| Box 656 | put an 'X' to tell HMRC the claim notification form has been submitted | Company Tax Return entry |
| Box 657 | put an 'X' to tell HMRC the additional information form has been submitted | Company Tax Return entry |
| Supplementary form CT600L | complete if claiming a payable tax credit or R&D expenditure credit | Supplementary pages to the Company Tax Return |
| Period of account longer than 12 months | submit a separate claim for each accounting period | The page states this is the deadline position for all accounting periods falling within the period of account |
| Presentation of the credit | show the expenditure credit as taxable income in the profit and loss account, or add it to profit in the tax computations | Merged scheme claim step |

### Notifying HMRC and claiming

**Notifying HMRC and claiming — making, amending or withdrawing**  _(https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird81800)_

| What | Value | Note |
| --- | --- | --- |
| Source | all figures below | https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird81800 |
| Making, amending or withdrawing a claim | up to the last day of two years beginning with the last day of the period of account, where the period of account to which the claim relates is not longer than 18 months | FA98/SCH18/Para. 83E |
| Additional Information Form requirement | required for all companies claiming SME R&D relief or R&D expenditure credit on or after 8 August 2023 (SI2023/813) | FA98/SCH18/Para. 83EA; a non-compliant claim is invalid |
| Late claims | HMRC has discretion to accept late claims (FA98/SCH18/Para. 83E(2)) | Discretion exercised in accordance with Statement of Practice 5 (2001) |

## The method, step by step

1. Confirm which scheme applies by checking when the accounting period began, using HMRC's [merged scheme and ERIS guidance](https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support). The merged scheme RDEC and ERIS apply to accounting periods beginning on or after 1 April 2024; a loss-making R&D intensive SME may choose the merged RDEC scheme instead of ERIS, but not both for the same expenditure.
2. Notify HMRC of the intention to claim within the claim notification period, using the [claim notification form](https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief), unless the company's claim history means it is not required. The dates of that period are in the table above, and the page states that a claim is invalid if the form is not submitted in time.
3. Identify the qualifying costs and calculate the gross credit as set out on [Work out your Research and Development tax relief](https://www.gov.uk/guidance/work-out-your-research-and-development-tax-relief): work out the costs relating to the R&D work, add them together, and apply the rate in the table above.
4. Submit the [additional information form](https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief) before the claim is made, one form per accounting period, with the accounting period dates matching the Company Tax Return.
5. Make the claim on the Company Tax Return following [Make a claim for R&D tax relief on your Company Tax Return](https://www.gov.uk/guidance/make-a-claim-for-rd-tax-relief-on-your-company-tax-return): show the expenditure credit as taxable income in the profit and loss account or add it to profit in the computations, tick the boxes listed in the table above, and complete supplementary form CT600L where a payable credit or expenditure credit is claimed.
6. Apply the payment steps in order, as set out in [CIRD112100](https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird112100): discharge Corporation Tax for the present accounting period at step 1 (using any step 2 amount brought forward first), apply the notional tax restriction at step 2, apply the PAYE cap at step 3, discharge Corporation Tax for other accounting periods at step 4, consider group surrender at step 5, then contract settlement liabilities, before any balance is payable at step 7.
7. Check the PAYE cap position and any exemption using [CIRD140000](https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird140000), which sets out the cap computation (the company's own PAYE and NIC liabilities, plus connected-company liabilities attributable to externally provided workers or contracted-out R&D, less the company's own liabilities attributable to supplies to connected companies) and the two conditions under which the cap does not apply.
8. Note that any payable amount at step 7 is generally paid direct to the claimant company under the nominations and assignments restrictions (CTA09/S1142C and D), as stated in [CIRD111000](https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird111000).
9. Amend or withdraw the claim within the window in the table above, per [CIRD81800](https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird81800). That page also states that claims must be made, amended or withdrawn in the Company Tax Return, and that an incomplete return, or a return where the amount of relief or credit is not quantified, is not a valid claim.

## Ask the client first

- On what date did the accounting period begin, and does the period of account cover more than 12 months (this decides the scheme, the number of additional information forms and the number of claims)?
- Has the company made a valid R&D claim before, and on what date, so that the claim notification requirement and the three-year lookback can be tested?
- Is the company a loss-making R&D intensive SME, which would open the ERIS choice instead of the merged RDEC scheme?
- What are the company's PAYE and National Insurance contributions liabilities for the payment periods in the accounting period, and are any connected companies supplying externally provided workers or performing contracted-out R&D (this drives the PAYE cap)?
- Does the company carry on a ring-fenced trade, or does it have a registered office in Northern Ireland, either of which takes the claim outside this Guide?
- Was any of the R&D contracted out to or by the company, or carried out overseas, given the contracted-out and overseas restrictions in the reformed rules?

## When to refuse or refer

- Accounting periods beginning before 1 April 2024, which fall under the old RDEC and SME schemes rather than the merged scheme.
- Ring-fenced trades: HMRC states different rates apply, and this Guide does not carry those rates.
- Companies with a registered office in Northern Ireland claiming enhanced R&D intensive support, which must follow the separate Northern Ireland provisions.
- The full ERIS calculation, the R&D intensity condition and the de minimis and sector declarations for ERIS claims.
- Whether particular activities meet the definition of R&D for tax purposes, and the technical narrative supporting that judgement.
- Overseas expenditure restrictions and contracted-out R&D analysis under the reformed rules, which HMRC deals with in separate manual pages.
- Group surrenders, contract settlements and connected-company cost allocation where accounting periods do not match or a connected company is overseas.
- Late claims, where HMRC's discretion is exercised in accordance with Statement of Practice 5 (2001).
- The numeric Corporation Tax main rate and small profits rate used in the step 2 notional tax restriction: the pages read for this Guide describe the applicable rate by name and do not state the percentages, so they are not stated here.

## Sources

- https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support
- https://www.gov.uk/guidance/work-out-your-research-and-development-tax-relief
- https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird112100
- https://www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief
- https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief
- https://www.gov.uk/guidance/make-a-claim-for-rd-tax-relief-on-your-company-tax-return
- https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird81800
- https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird140000
- https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird111000

Drafted by OpenAccountants. Not yet reviewed or approved by a named accountant.

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