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Enhanced R&D Intensive Support (ERIS): Tax relief for loss-making R&D intensive SMEs

Through Enhanced Research and Development Intensive Support (ERIS), HMRC offers relief for SMEs that are loss-making and conduct intensive R&D. Eligible companies can claim £27 for every £100 of R&D investment.

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Claim Enhanced R&D Intensive Support

    What is an R&D intensive SME?

    HMRC calculates R&D intensity as the proportion of an SME’s qualifying R&D expenditure compared to its total spending. Loss-making SMEs that meet the R&D intensive threshold can claim the Enhanced R&D Intensive Support (ERIS) 14.5% credit rate.

    What is the R&D intensive threshold for SMEs?

    For accounting periods starting on or after 1 April 2023 (up to 31 March 2024), SMEs are classed as R&D intensive if their qualifying R&D expenditure covers at least 40% of their total spending during a given financial period.
     
    For accounting periods starting on or after 1 April 2024, SMEs are considered to be R&D intensive if their qualifying R&D expenditure covers at least 30% of their total spending during a given financial period.
     
    The intensity ratio will consider any connected companies. If there are connected companies as defined by HMRC, total expenditure will be aggregated for calculating R&D intensity.
     
    To be classed as an SME for R&D purposes, companies must also meet specific criteria such as having fewer than 500 employees, an annual turnover of less than €100 million, or a balance sheet of less than €86 million.

    FAQs

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    What is the credit rate for R&D intensive SMEs?

    For R&D intensive SMEs, the credit rate is 14.5%. The additional deduction rate is 86% on top of the normal 100% tax deduction for research and development.

    Can non-R&D intensive SMEs claim R&D Tax Credits?

    If your company is conducting eligible R&D activities but isn’t a loss-making R&D intensive SME, then you should look to claim under the Merged R&D Scheme. For accounting periods starting on or after 1 April 2024. For accounting periods starting before this you can claim under the R&D SME scheme if you’re a small or medium sized business, or RDEC if you’re a large businesses.

    What if my company doesn’t meet the intensity threshold for ERIS in the current accounting period, but did in the previous one?

    For companies that have just slipped out of the intensity threshold after previously claiming, there is a 12-month grace period. So, if your company was eligible in the last 12 months and made a valid claim during that time you will still be able to claim.

    How we can help

    Our expert team of technical consultants have field experience across a range of software, science and engineering industries. This means they’re uniquely able to identify your eligible R&D expenditure while ensuring your claim is fully compliant with HMRC rules. 

    How we can help

    Our expert team of technical consultants have field experience across a range of software, science and engineering industries. This means they’re uniquely able to identify your eligible R&D expenditure while ensuring your claim is fully compliant with HMRC rules. 

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