SME R&D Tax Credits: A Comprehensive Guide for 2025

Understanding R&D Tax Relief for SMEs

Research and Development (R&D) tax credits are a government incentive designed to encourage innovation by allowing companies to claim back a portion of their R&D expenditure. For small and medium-sized enterprises (SMEs), this relief can provide a significant financial boost, enabling further investment in innovation and growth.

Key Changes Effective from April 2024

As of April 1, 2024, the UK government implemented significant reforms to the R&D tax relief schemes:

• Merged Scheme: The previous separate schemes for SMEs and large companies (RDEC) have been consolidated into a single scheme, simplifying the application process and providing a unified set of rules .
• Standard Relief Rate: Under the merged scheme, companies can claim a 20% tax credit on qualifying R&D expenditure.
• Enhanced Relief for R&D-Intensive SMEs: Loss-making SMEs that spend at least 30% of their total expenditure on R&D activities are eligible for an increased tax credit rate of 27%.
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Eligibility Criteria for SMEs

To qualify for R&D tax relief under the SME classification, your company must:

• Employ fewer than 500 staff members.
• Have either an annual turnover under €100 million or a balance sheet total under €86 million .

It's important to note that these thresholds include any linked or partner enterprises, which can affect your SME status.

Qualifying R&D Activities

Eligible R&D activities must aim to achieve an advance in science or technology and involve overcoming scientific or technological uncertainties. Examples include:

• Developing new products, processes, or services.
• Making appreciable improvements to existing products or services.
• Creating prototypes or conducting trials.
• Researching and developing new software or IT solutions.
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Qualifying Expenditures

Under the R&D tax relief scheme, SMEs can claim for various costs directly associated with R&D activities, such as:

• Staffing Costs: Salaries, wages, and associated costs for employees directly involved in R&D.
• Consumables: Materials and utilities used during R&D processes.
• Software: Costs of software used in R&D activities.
• Subcontracted R&D: Payments to subcontractors for R&D work.
• Clinical Trial Volunteers: Payments to volunteers participating in clinical trials.
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Claiming R&D Tax Relief

To make a claim:

1. Identify Eligible Projects: Determine which projects meet the criteria for R&D activities.
2. Calculate Qualifying Expenditure: Assess all associated costs that qualify under the scheme.
3. Prepare Documentation: Compile detailed records of R&D activities and expenditures.
4. Submit the Claim: Include the claim in your Company Tax Return (CT600) and submit it to HMRC.

It's advisable to consult with R&D tax specialists to ensure accuracy and compliance, maximising the potential benefit from your claim.
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Why Choose Claimly for Your R&D Tax Claim?

Many businesses struggle with R&D tax claims due to a lack of expertise, time constraints, or fear of HMRC audits. That’s why working with Claimly makes all the difference.
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✔ Expert Guidance – Our vetted tax specialists have deep expertise in both technical R&D analysis and financial tax compliance.

✔ Maximised Claims – We ensure you claim every eligible expense, increasing your refund or tax savings.

✔ Hassle-Free Process – We handle everything, from identifying qualifying R&D projects to submitting your claim.

✔ HMRC Compliance – We ensure that your claim is fully compliant, reducing audit risk.

✔ Fast & Efficient – We streamline the claim process so you can receive your benefit quickly.

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Calculate your claim here.