The two-scheme world
For two decades, UK R&D relief split by company size. SMEs claimed an enhanced deduction, an extra percentage of qualifying spend on top of the normal 100%, and, when loss-making, could surrender losses for a payable credit. Large companies, and SMEs excluded from their own scheme by grants or subcontracting rules, used the R&D Expenditure Credit, an above-the-line taxable credit. The merged scheme kept RDEC’s shape and retired the rest: HMRC’s policy paper describes the measure as combining the two into one merged scheme for accounting periods beginning on or after 1 April 2024.
The rates, as they stood
The cleanest official summary of the endgame comes from HMRC’s own statistics commentary. From 1 April 2023 the SME scheme provided an 86% enhancement and a 10% credit on surrendered losses, down from 130% and 14.5%. The RDEC rate rose from 13% to 20%. R&D-intensive loss-makers kept a 14.5% credit, the seed of what became ERIS. RDEC’s earlier steps, for the record: 11% from 2015, 12% from 2018, 13% from 2020, 20% from April 2023.
Why the old numbers mislead now
Three structural differences make old claim values a poor baseline:
- Different arithmetic. The SME route was a deduction whose value tracked your tax rate and loss position; the merged credit is a taxable above-the-line amount. Same spend, different mathematics.
- Different boundary rules. Overseas contractor spend that padded pre-2024 claims is now largely excluded, and the contracting-out entitlement rule reassigned whole claims between customers and contractors.
- Different subsidy treatment. Grant-funded projects that were pushed out of SME relief into RDEC now sit comfortably in the merged scheme, which moved some claims up while the rate changes moved others down.
A company whose 2022 claim paid a third of its R&D budget, and whose 2025 claim pays half of that, is not necessarily doing worse R&D. And one whose claim grew is not necessarily doing better. The regime moved underneath both. Budget from the current arithmetic, not from nostalgia.
Where the old rules still bite
Enquiries and amendments for pre-2024 periods run entirely on the old rules, including the subsidised-expenditure restrictions that no longer exist for current periods, so correcting an old claim means reasoning in the old world. And the SME definition, staff and financial ceilings with linked and partner enterprise aggregation, lives on inside ERIS. The past is retired, not irrelevant; the reform story with dates in order is on what changed in 2023 and 2024.
- HMRC, R&D tax relief for SMEs (old scheme guidance), gov.uk
- HMRC, R&D expenditure credit for large companies (old RDEC guidance, with rate history), gov.uk
- 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
Frequently asked questions
Can we still claim under the old schemes?
Only for accounting periods that began before 1 April 2024, and only while those periods remain inside the claim time limits. The old SME guidance itself now frames the scheme as applying to periods starting before that date. Everything from then on is merged scheme or ERIS.
Why did our claims shrink after 2023?
Because the rates moved before the schemes merged: from April 2023 the SME enhancement fell from 130% to 86% and the SME credit from 14.5% to 10% for most companies, while RDEC rose from 13% to 20%. Direction of travel differed by scheme, which is why experiences differ so sharply.
Do old-scheme rules still matter at all?
Twice over: open enquiries and amendments for old periods run on old rules, and some current-regime concepts, the SME size test for ERIS in particular, carry old-scheme definitions forward. History with live consequences.
Where do we look for the current rules?
The merged scheme explained and ERIS explained cover the live regime; how much you can claim carries the current arithmetic. This page deliberately does not.