R&D tax credit loans

The R&D schemes for periods from April 2024

Merged scheme

For accounting periods beginning on or after 1 April 2024. A taxable expenditure credit of 20% of qualifying R&D costs, for companies of any size. At step 2 of the payment steps, notional tax is deducted at the main rate of 25% for companies with profits chargeable at the main rate, and at the small profits rate of 19% for others.

Enhanced R&D intensive support

For loss-making small and medium-sized companies whose relevant R&D spending is at least 30% of their total spending, including connected companies. An extra deduction of 86% of qualifying costs, and a payable credit of up to 14.5% of the loss surrendered.

Cap on payable credits

The credit paid out for a period cannot exceed £20,000 plus 300% of the company’s relevant pay-as-you-earn and National Insurance liabilities for the period, unless the company is exempt. Under the merged scheme any excess is carried forward.

Claim notification

Required if the company is claiming for the first time or has not claimed in the previous three years, within six months of the end of the period of account. Not needed for claims made on or after 1 April 2027.

Additional information form

Detailed information about the R&D projects and costs, which must be submitted before the claim is made.

What a claim is worth and what a lender advances

The credit must also fit under the cap of £20,000 plus 300% of the company’s pay-as-you-earn and National Insurance for the period. On the merged scheme, a profit-making company with £400,000 of qualifying costs gets a credit of £80,000; after notional tax at 25% the net value is £60,000, or £64,800 where the 19% small profits rate applies.

What the lender checks

The lender reads the claim as HMRC would. It wants to know who prepared it and how, which projects it covers and why they count as R&D for tax purposes, how the qualifying costs were worked out, and whether the claim notification and the additional information form were filed on time. It also asks how the adviser who prepared the claim is paid, and whether the fee is a share of the relief.

It checks the scheme. A loss-making company claiming enhanced R&D intensive support must show its R&D spending is at least 30% of its total spending, including connected companies; a company that falls short is on the merged scheme and gets a different, smaller payable amount. The lender also works through the cap on payable credits, because a company with a small payroll can have a large claim and a small payment.

It checks your history: earlier claims, whether any were reduced, and whether you owe HMRC money that could be set against the credit. Arrears of VAT or payroll taxes reduce what reaches the lender.

R&D tax credit loans suit a company with a sound claim, a record of claims accepted, and a need for cash before the relief arrives. A first claim, a claim built on a change of adviser, or a claim much larger than the year before will be read with more care. The funding search is for limited companies, which are the businesses that claim R&D tax relief.