The merged R&D tax relief scheme: a practical guide for UK businesses

The introduction of the merged R&D tax relief scheme marks a pivotal moment for businesses seeking to innovate in the UK. By unifying previous tax relief frameworks, the new system aims to simplify access to the generous tax reliefs for R&D innovation (which have now been in existence for a quarter of a century). The scheme forms part of the UK Government’s commitments to investment in R&D, as outlined in the Industrial Strategy published in June 2025 and sits alongside other tax measures such as Patent Box, capital allowances and investment schemes such as the Enterprise Investment Scheme. The Government acknowledges that investment (along with tax incentives) in R&D is an important lever to drive economic growth in the UK.

But who qualifies under the merged tax relief scheme, and what steps must businesses take to benefit?

How to check if your business qualifies?

• Identify eligible projects: Projects must aim to make a genuine scientific or technological advancement and address uncertainties that competent professionals cannot easily resolve
• Keep detailed records: Maintain clear documentation of project objectives, challenges encountered, and the methods used to overcome them. This will be crucial when submitting a claim
• Calculate qualifying expenditure: Costs that can be claimed include staff wages, materials, software, and certain subcontractor expenses directly linked to eligible R&D activities
• For loss-making SMEs: confirm your R&D intensity calculation to determine if you qualify for enhanced R&D intensive support

What’s different now?

The transition to a merged scheme brings greater consistency, reducing the confusion that once surrounded multiple reliefs and their varying criteria. This clarity not only speeds up claims but also broadens participation, with early data showing a notable uptake in both applications and successful outcomes.

Looking ahead

As British innovation surges, driven by growth in cleantech, digital transformation, and advanced manufacturing, the merged R&D tax relief scheme is poised to play an important role. For businesses, understanding the qualifying criteria and following a structured approach to claims will be key to unlocking this vital form of funding and staying ahead in the competitive R&D landscape.

To download the full merged R&D tax relief scheme document, please click here. 

If you wish to discuss this in further detail, please contact one of our Business Tax experts here.