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The R&D Tax Relief Estimator

Free, instant and no email required — a quick estimate for startups. Figures use 2026/27 rates.

Estimate only, based on 2026/27 rates and standard assumptions — your exact position depends on your circumstances. Not personal tax advice.

The short answer

A loss-making company whose qualifying R&D is at least 30% of total expenditure can claim Enhanced R&D Intensive Support, worth roughly 27p per £1 of qualifying spend. Everyone else claims the merged R&D expenditure credit at 20%, which is itself taxable and nets about 15p to 16p. Both routes cap the payable credit at £20,000 plus 300% of your PAYE and National Insurance for the period.

Which route you are on, and why it matters so much

There are two ways to claim, and the gap between them is large. The merged R&D expenditure credit is 20% of qualifying spend, but the credit is itself taxable, so what you keep is about 15p in the pound at the main rate and 16.2p for a loss-maker or small-profits payer.

Enhanced R&D Intensive Support is the alternative, and it is only open to a loss-making company whose qualifying R&D is at least 30% of total expenditure. You deduct an extra 86% of qualifying costs, surrender the resulting loss and take a payable credit at 14.5% — about 26.97p per £1. On £220,000 of qualifying spend that is roughly £59,000 against £36,000. Same work, same evidence, £23,000 of difference decided by one calculation.

There is also a year of grace: a company that met the intensity condition in one period can still use the intensive route in the next even if it narrowly fails the test. And the test aggregates connected companies, which is where group-structured spinouts get caught out.

The cap, which is what actually limits most claims

Both routes cap the payable credit at £20,000 plus 300% of the company's PAYE and National Insurance liabilities for the period. It exists to stop companies with no real UK employment footprint extracting cash, and it bites hardest on exactly the startups that need the money — the ones whose engineers invoice through their own limited companies, or whose founders take dividends rather than salary.

The difference between the two routes matters here too. Under the merged scheme an amount above the cap is carried forward. Under the intensive route a claim that exceeds the cap is invalid. That is not a restriction, it is a failed claim, and it is why this calculator shows you the cap rather than hiding it in a footnote.

There is an exemption from the cap, but it needs two things at once: the company creates or manages relevant intellectual property through its own employees, and connected-company subcontractor plus externally-provided-worker costs are no more than 15% of total qualifying R&D expenditure. A team built mostly of contractors will usually fail that second test.

What counts as qualifying spend

Mostly people — the proportion of each person's salary, employer National Insurance and pension that went into the R&D itself. Then externally provided workers and subcontractors at restricted rates (generally 65% for unconnected parties), consumable items genuinely used up, software licences, data licences and cloud computing, and payments to clinical trial subjects.

What does not qualify: rent, marketing, patent filing, and the founders' time spent fundraising, however central all of that felt at the time.

Cloud and data have qualified since April 2023 and are the single most commonly omitted category we see — usually because whoever prepared the previous claim was working from a list written before the rule changed. For an AI or data-heavy company that omission alone can halve a claim.

Two deadlines that have nothing to do with whether you qualify

If this is your first claim, or you have not claimed in the previous three years, you must send HMRC a claim notification within six months of the end of your period of account. Founders assume they have the two-year window for amending a return; the notification window shuts eighteen months earlier, and missing it makes the claim invalid with no way back.

And the additional information form must reach HMRC before, or on the same day as, the CT600. Send the return first and HMRC writes to say it has removed the claim from it.

Why the estimate is only an estimate

This tool does the arithmetic. It cannot tell you whether your project actually qualifies, which is the part that decides everything — the test is an advance in science or technology resolving uncertainty a competent professional could not readily deduce, and it is a technical question rather than a commercial one. HMRC opened compliance checks on 17% of claims in 2023-24 and 77% of those checks ended in an adjustment, so the qualifying judgement is worth getting right rather than getting generous.

We prepare and file R&D claims on a fixed fee agreed before we start — never a percentage of the credit — with any HMRC enquiry included.

Common questions

About this calculation

How much is R&D tax relief worth?

Under the merged R&D expenditure credit it is 20% of qualifying spend, but the credit is taxable, so you keep about 15p in the pound at the main rate and 16.2p if you are loss-making or on the small profits rate. A loss-making company whose R&D is at least 30% of total expenditure can use Enhanced R&D Intensive Support instead, worth roughly 26.97p per £1. On £200,000 of qualifying spend that is the difference between roughly £32,000 and roughly £54,000.

What is the 30% R&D intensity test?

It decides whether a loss-making company can use the more generous intensive route. Divide qualifying R&D expenditure by total expenditure for the period; at 30% or above, the intensive route is available. The test aggregates connected companies, so a group structure can push you below it. There is also a one-year grace period: a company that met the condition and made a valid claim in one period can still use the route in the next even if it narrowly fails.

What is the PAYE and NIC cap on R&D claims?

The payable credit is limited to £20,000 plus 300% of the company's PAYE and National Insurance liabilities for the period. It bites hardest on companies whose engineers are contractors rather than employees. Under the merged scheme an excess is carried forward; under the intensive route a claim exceeding the cap is invalid rather than restricted, which is a much worse outcome and worth modelling before you rely on the cash.

Do cloud computing costs qualify for R&D relief?

Yes, since April 2023 — along with data licence costs. Compute behind genuinely qualifying development work goes into the claim; production hosting for a live product does not, so the split has to be defensible. This is the most commonly omitted category we see, because a preparer working from an older list of qualifying costs simply leaves it out. For an AI or data-heavy company it can be half the claim.

Does grant funding stop us claiming?

No, not any more. Under the merged scheme the old subsidised-expenditure restriction has gone, so an Innovate UK or similar grant no longer cuts your R&D claim down the way it used to. This is the single most common piece of out-of-date advice we correct, and it has cost grant-funded companies a great deal of money.

How accurate is this calculator?

The arithmetic is right; the inputs are the hard part. It cannot judge whether your projects qualify, which is the question that decides the claim — that is a technical test about advances in science or technology, not a commercial one. Treat the output as an indication of what the routes are worth, then get the qualifying judgement done properly before anything is filed.

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