Two reliefs reward innovation: R&D tax relief on the cost of qualifying research, and the Patent Box on profits from patents. Here is how the merged R&D scheme and ERIS work for 2026/27, what counts as qualifying R&D, and how the 10% Patent Box rate applies.
The merged R&D scheme, ERIS for loss-making R&D-intensive SMEs, what qualifies, and the 10% Patent Box — with worked examples and how to claim.
For accounting periods beginning on or after 1 April 2024, the old SME and RDEC schemes were replaced by a single merged scheme based on the RDEC model. Most companies now claim a 20% R&D expenditure credit on qualifying spend. The credit is taxable, so the net benefit is lower than the headline rate.
That is an effective benefit of about 15% of qualifying spend for a company paying 25% Corporation Tax (around 16.2% at the 19% rate). Model it with our Corporation Tax calculator.
Loss-making SMEs that are R&D-intensive — where qualifying R&D is at least 30% of total expenditure — can instead claim Enhanced R&D Intensive Support (ERIS). ERIS gives an extra 86% deduction (186% in total) and a payable credit of up to 14.5% of the surrenderable loss, worth up to roughly 27% of qualifying spend.
| Route | Who | Headline value |
|---|---|---|
| Merged scheme | Most companies, large or SME | 20% credit (≈15% net) |
| ERIS | Loss-making, R&D-intensive SMEs (30%+) | Up to ≈27% |
Your project must seek an advance in science or technology, involve scientific or technological uncertainty that a competent professional could not easily resolve, and follow a systematic approach. Qualifying costs include staff, subcontractors (subject to rules), externally provided workers, consumables, software and cloud/data costs. Routine work, the arts, and most overseas subcontractor and worker costs no longer qualify.
HMRC has tightened R&D claims. Most claims need an Additional Information Form submitted before the Company Tax Return, and many require advance notification within six months of the period end. Keep contemporaneous records of the technical advance and uncertainty.
The Patent Box lets companies apply a 10% Corporation Tax rate to profits from qualifying patented inventions — a real saving against the 25% main rate. You must own or exclusively license qualifying patents (for example from the UK or European Patent Office), elect in within two years of the end of the accounting period, and meet the R&D "nexus" requirement linking the benefit to your own development spend.
Many innovative companies claim R&D relief on the cost of developing a product and the Patent Box on the profits once it is patented and sold. The two reliefs are complementary; a specialist can help structure and evidence both.
gov.uk R&D tax relief · merged scheme and ERIS · the Patent Box.
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The merged scheme, ERIS, qualifying R&D and the Patent Box — answered for 2026/27.
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Find an expert →UK Tax Hero provides general tax guidance and a free expert-matching service for the 2026/27 tax year. It is not personal tax, legal or financial advice. Figures are based on published HMRC rates and may change. Always confirm details on GOV.UK or with a qualified professional before acting.
