Phase one: the 2023 rebalancing
The first move was arithmetic. For expenditure from 1 April 2023, the SME scheme’s enhancement fell from 130% to 86%, and its credit from 14.5% to 10%. RDEC rose from 13% to 20%. HMRC’s own summary states it that cleanly. Loss-making SMEs whose R&D intensity reached the 40% threshold kept the 14.5% credit. That was the first appearance of the intensity concept that became ERIS. The same date opened the data-licence and cloud-computing cost category, for periods beginning that day.
The direction was unmistakable. A year before the structures formally merged, value was already moving from the scheme where HMRC was measuring the loss towards the above-the-line model.
Phase two: the compliance layer
Alongside the rates came the compliance machinery. Claim notification arrived for first-time and lapsed claimants, applying to periods beginning on or after 1 April 2023, with its six-month window. The mandatory Additional Information Form arrived with it, carrying named senior officers and named agents. Neither changed what qualifies. Both changed what a claim physically is, and between them they made weak claims visible before payment. The context and the numbers behind that shift are on the crackdown.
Phase three: the 2024 merger
For accounting periods beginning on or after 1 April 2024, the two schemes became one merged, above-the-line credit at 20%. That is the policy paper’s own framing. ERIS was preserved for loss-making R&D-intensive SMEs, with the intensity threshold dropping to 30% and a one-year grace period. Two structural rules landed with the merger. The contracting-out entitlement test says the claim belongs to whoever decided to undertake the R&D. The overseas restrictions limit contractor and EPW spend. And one restriction died: the SME subsidised-expenditure rules were not carried forward, so grant-funded projects stopped losing relief.
What it means in practice, two years on
For anyone claiming now, the reform reduces to three habits. Date every question by accounting period, because three regimes can touch one company’s recent history. Treat pre-2024 claim values as history rather than forecast: the arithmetic and the boundary rules both moved. And build for the compliance layer, which is not going away. The current rules live on the merged scheme and ERIS; the retired world is preserved on the old schemes page.
- HMRC, Research and Development Tax Credits Statistics, September 2025 (rate-change summary), gov.uk
- HMRC policy paper, Merger of current SME and RDEC schemes, gov.uk
- HMRC, technical note on changes to R&D tax reliefs at Autumn Statement 2023, gov.uk
- HMRC, Tell HMRC that you're planning to claim R&D tax relief, gov.uk
Frequently asked questions
Which rules apply to our open accounting period?
Anchor on when the period began: periods beginning on or after 1 April 2024 are merged scheme or ERIS; earlier periods run the old schemes with the 2023 rates for expenditure from April 2023. Amendments and enquiries follow the period's own rules, not today's.
Why did the changes trigger on different dates?
Because Parliament used different anchors: the 2023 rate changes applied to expenditure incurred from 1 April 2023, the data-and-cloud category to periods beginning then, and the merger to periods beginning from 1 April 2024. The mixed anchors are exactly why claims spanning those dates deserve care.
Was the reform just rate cuts?
No, three things at once: rate rebalancing between the schemes, a compliance layer (notification, the AIF, named agents), and structural merger with the ERIS carve-out and the UK-territoriality rules. The compliance layer is the part that changed daily practice most.
Is the regime stable now?
The structure has held since April 2024, with movement since concentrated in administration, advance assurance expanded in May 2026, and in compliance intensity. Nothing in tax is permanent, which is what the updates hub is for.