How to claim R&D Expenditure Credit (RDEC and ERIS explained)

This guidance is for UK companies currently undertaking research and development activities and preparing claims under the merged R&D Expenditure Credit (RDEC) or Enhanced R&D Intensive Support (ERIS) framework, often referred to as the r&d expenditure credit rdec regime.

It explains how the merged RDEC and ERIS framework operates in practice, how claims are treated for Corporation Tax purposes, and how expenditure is now assessed under HMRC’s updated rules.

R&D claims remain a high-scrutiny area for HMRC. Errors in scheme selection, expenditure classification, or overseas cost treatment can affect claim validity, timing of relief, or credit payments.

If you are new to R&D tax credits and want to understand how the full framework operates before getting into the RDEC and ERIS mechanics, a comprehensive overview of R&D tax credits covers the schemes, eligibility principles, and relief structures in full.

R&D Expenditure Credit (RDEC) and ERIS: How the Claim Process Works

In the Autumn Statement last year, it was announced that the existing R&D Expenditure Credit and Small and Medium Enterprise Scheme would be merged from April 2024 under the updated rdec scheme framework. The merged scheme R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) became effective for accounting periods beginning on or after 1 April 2024. The expenditure rules for both are the same, but the calculation is different and forms part of the wider rdec claim process.

The merged RDEC scheme is a taxable expenditure credit and can be claimed by eligible trading companies within the charge to UK Corporation Tax. You can choose to claim under the merged scheme instead even if you are eligible for the ERIS, but you cannot claim under both schemes for the same expenditure.

For businesses that want to understand how Corporation Tax is calculated and how credits of this nature reduce the overall liability, the complete guide to understanding Corporation Tax sets out the wider framework within which RDEC operates.

The calculation and the payment steps of the merged scheme RDEC are broadly the same as the old RDEC scheme, however:

• a lower rate of notional tax restriction is available to small profit-makers and loss-makers; and
• a more generous PAYE cap applies.

The merged RDEC scheme is liable to Corporation Tax as it is deemed to be trading income.

The ERIS scheme allows loss-making R&D intensive SMEs to:

• deduct an extra 86% of their qualifying costs (additional deduction) in calculating their adjusted trading loss, as well as the 100% deduction which already appears in the accounts, to make a total of 186% deduction; and
• claim a payable tax credit, which is not liable to tax, and which is worth up to 14.5% of the surrendered loss.

The changes in the rules are complex and advice should be sought to ensure that any R&D spend remains qualifying. There have also been significant changes to the restrictions for expenditure on overseas R&D activities which are now generally restricted.

How R&D claims are reported (2026 compliance view)

CT600 reporting

R&D Expenditure Credit claims are included in the Corporation Tax return (CT600) along with supporting computations to evidence qualifying expenditure.

For a complete step-by-step walkthrough of how R&D tax credit claims are prepared and submitted through the CT600 including what supporting documentation HMRC expects at each stage the full claiming process guide covers this in detail.

Accounting treatment

R&D credits are recognised in the accounts in line with applicable accounting standards and the company’s accounting policy, either within operating profit or as a separate credit line, depending on rdec accounting treatment.

Timing of recognition

Recognition is generally aligned with the accounting period in which the qualifying R&D expenditure is incurred, subject to applicable accounting treatment.

Real-world application of R&D expenditure credit rules

• Subcontracted R&D: Where R&D work is outsourced, eligibility depends on contractual control and qualifying activity alignment.
• Subsidised projects: Claims may be impacted where expenditure is subsidised or externally funded.
• Overseas development teams: Restrictions may apply where R&D activity is conducted outside the UK under updated HMRC rules.
• Loss-making companies: Under RDEC/ERIS, loss-making entities may still be eligible for payable credits depending on scheme conditions. Loss-making businesses that are unsure whether their activities meet HMRC’s definition of qualifying R&D in the first place should start with an eligibility assessment could you claim R&D relief walks through the key qualifying conditions.

Compliance considerations for current-year claims

HMRC continues to place emphasis on the robustness of R&D claims, particularly where expenditure involves subcontractors, overseas activity, or blended funding structures.

Correct scheme selection under the merged RDEC and ERIS framework is essential to ensure claims are processed accurately and in line with current legislation, including correct handling of any rdec claim submissions.

Scheme selection starts with confirming your company meets the qualifying criteria the full breakdown of how to qualify for R&D tax credits covers the eligibility conditions for both RDEC and ERIS in detail.

Advisory support

Where companies are preparing or reviewing R&D claims, it is important to ensure that both financial and technical justifications align with HMRC expectations under the current framework.

We can assist with structured R&D claim reviews, helping ensure expenditure classification, scheme selection, and Corporation Tax reporting are correctly applied.

Companies whose R&D activity leads to patentable innovations should also consider whether Patent Box relief applies it can reduce the Corporation Tax rate on profits derived from qualifying patents to 10% and works alongside R&D relief as part of a broader innovation tax strategy. The key criteria for qualifying for Patent Box relief are worth reviewing early in the development process.

R&D Expenditure Credit Claims and HMRC Submission Process

Understanding how to claim R&D expenditure credit is essential for companies investing in innovation and technological development. The RDEC scheme allows qualifying businesses to receive a taxable credit based on eligible R&D spend, but the claim must be carefully calculated and fully supported with technical and financial evidence, following correct rdec calculation steps.

To make a valid claim, businesses must clearly identify qualifying R&D activities, separate eligible costs such as staff time, subcontracted work, and software, and ensure these figures are accurately reflected in the corporation tax computation. HMRC expects detailed documentation to support the claim, and errors or weak evidence can result in delays, reductions, or full rejection of the relief.

At Cigma Accounting, we support businesses across Fulham Broadway, helping them prepare accurate R&D expenditure credit claims and ensure compliance with HMRC requirements. We also assist companies in Parsons Green and Walham Green, ensuring RDEC submissions are correctly structured and aligned with current corporation tax rules for 2026.