SME R&D Tax Relief

Boost Your Business with SME R&D Tax Incentives

Small and medium-sized enterprises (SMEs) in the UK can claim generous tax relief on qualifying R&D expenditure. Under the SME R&D tax relief scheme, companies may deduct 186% of eligible costs (100% ordinary plus 86% enhanced deduction) against taxable profits. Loss-making SMEs can also surrender losses for a cash tax credit. The payable credit is 10% of surrendered losses (rising to 14.5% if the project meets the R&D intensity test for expenditure after April 2023). These figures reflect the changes introduced in April 2023. (From accounting periods beginning on or after 1 April 2024, companies must instead claim under the new merged R&D scheme, as explained on our Merged R&D Scheme page.)

Request a free audit

Eligibility

To claim SME R&D relief, your UK company must qualify as an SME (fewer than 500 staff, with turnover below €100m or balance sheet under €86m). You must also be carrying out R&D in the UK – projects that seek to advance knowledge or technology in science or engineering (not in fields like humanities) are eligible. The rules exclude certain projects (for example, those already funded by other State aid in excess of €7.5m). If your project is subcontracted or you received state aid, you cannot use the SME scheme – in those cases you may use the RDEC scheme (see our RDEC page). Importantly, from April 2024 all companies (large or small) must follow the merged scheme rules.

See If You Qualify

Eligibility

See If You Qualify

Benefits of the SME Scheme

The enhanced 186% deduction available under the SME R&D scheme offers significant tax relief for innovative businesses. In practical terms, for every £100 of eligible R&D expenditure, companies can deduct £186 from their taxable profits.

For loss-making companies, this enhanced deduction can be surrendered to HMRC for a cash credit. The payable credit is typically worth 10% of the surrendered loss, but this increases to 14.5% for businesses classed as R&D intensive (those spending at least 30% of total expenditure on qualifying R&D), as of April 2023.

There is a cap on the payable credit, set at £20,000 plus 300% of the company’s annual PAYE/NIC liability. These rules were introduced to help prevent abuse of the scheme, replacing the previous 130% deduction and fixed 14.5% credit.

Despite the tightening of criteria, the SME scheme still offers meaningful financial support, helping eligible businesses recover a substantial portion of their innovation costs.

How FI Group Can Help

FI Group’s team of R&D tax specialists includes PhD-qualified consultants and industry experts who understand both the scientific detail of your projects and the technical requirements of the legislation. We help you identify eligible activity, capture all qualifying costs, and prepare a fully compliant claim.

Our unique in-year claiming process means you don’t have to wait until year-end to access relief. Through our Quarterly R&D model, we support you in tracking and claiming expenditure as it occurs, improving cash flow and reducing administrative burden.

Our HMRC enquiry rate of 4% is much lower than industry averages (where around 17% of R&D claims are questioned), our rigorous documentation and submission process ensures your claim stands up to scrutiny.

FI Group operates from offices across England and Scotland, with global support from 43 offices in 20 countries. This international reach allows us to align your UK claim with wider innovation strategies — offering both local insight and global coordination.

Contact FI Group Today

How FI Group Can Help