Merged Research & Development (R&D) Scheme Explained

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Understanding the Merged R&D Scheme

The have been some groundbreaking changes recently as far as R&D tax incentives and relief is concerned. The UK Government has introduced a single, unified relief scheme designed to simplify innovation support across the country.

If your business carries out research and development activities, it’s vital to understand how the Merged R&D Scheme could impact your R&D tax claims, both now and in the future.

What is the Merged R&D Scheme?

The Merged R&D Scheme brings together two prominent UK R&D tax relief schemes and forms a single one.

Elements of the former SME R&D Tax Relief and RDEC (Research and Development Expenditure Credit) are brought into a single system.

The aim and purpose of the Merged R&D Scheme (often referred to as the R&D Single Scheme) to create a fairer, more streamlined way for businesses of all sizes to claim valuable tax relief for qualifying innovation work.

Introduced from the 1st of April 2024, in the previous government’s Autumn statement, the Merged Scheme ensures that all UK companies undertaking eligible R&D activities are assessed under the same set of rules and rates.

FIND OUT IF YOU'RE ELIGIBLE

Key Features of the Merged R&D Scheme

Unified tax relief system: Under the merged scheme, there is no need to submit separate claims under the SME or RDEC schemes. Instead, just one pathway exists for businesses claiming R&D for tax purposes.
Single set of R&D tax rates: Companies can expect a credit worth 20% of qualifying R&D expenditure (which is subject to tax).
Subsidised R&D and subcontracted work: There are simplified rules around funded and subcontracted projects.
Focus on UK-based R&D: Overseas R&D costs are now largely excluded, encouraging domestic and national innovation.

Am I Eligible for the R&D Merged Scheme?

You could be eligible for relief under the Merged R&D Scheme if:

You are a UK-registered company subject to UK Corporation Tax
Your company is undertaking qualifying R&D activities (creating or improving products, processes, services, or systems through innovation, science, or technology
Your expenditure relates to staff costs, materials, utilities, or certain subcontractor costs
Your R&D activities align with the updated HMRC definitions of qualifying work

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R&D Merged Scheme Updates

The merged scheme also introduces several significant updates, particularly in comparison to the SME and RDEC tax relief schemes. The most significant changes are as follows:

PAYE/NIC cap: The amount of R&D tax credits that are payable is capped at £20,000 plus three times the company’s relevant PAYE and NIC liabilities.
Restrictions on overseas R&D: Only R&D conducted in the UK is generally eligible unless there are qualifying exemptions.
Increased compliance requirements: All claims must now include a detailed Additional Information Form, submitted before the Corporation Tax return.

Being well-prepared is essential to securing your claim under the new rules.

How Cooden Tax Consulting Can Help

At Cooden Tax Consulting, we specialise in helping innovative businesses maximise their R&D tax relief. Navigating the new Merged Scheme rules can be complex — but you don’t have to do it alone.

We can:

Review your R&D activities for eligibility
Maximise your claim within the new scheme
Handle compliance requirements
Guide you through the R&D tax relief application process from start to finish

We have extensive experience helping businesses get as much out of their tax relief claims as possible – we can do the same for you. You can call us on 01424 225345 or email us at info@coodentaxconsulting.co.uk for more information.

Merged R&D Scheme FAQs

What is the merged R&D tax scheme?: The merged scheme combines the old SME and RDEC schemes into a single, unified programme, offering a consistent method of claiming R&D tax relief across all businesses.
When did the merged R&D scheme come into effect?: The changes apply to all accounting periods beginning on or after 1 April 2024.
Does the merged scheme replace the SME and RDEC schemes completely?: Yes, for most companies. However, R&D-intensive SMEs may still benefit from enhanced support through the new ERIS scheme.
How much can I claim under the merged scheme?: The standard credit rate under the merged scheme is 20% of qualifying R&D expenditure (subject to Corporation Tax).