Who qualifies for ERIS?

The Enhanced R&D Intensive Support (ERIS) scheme is available to small and medium-sized enterprises (SMEs) that are loss-making and have a high level of qualifying R&D expenditure. This scheme applies to SMEs with accounting periods beginning on or after 1 April 2024. 

To qualify, the company must first meet the relevant conditions for an SME and must be making a trading loss for the accounting period. The company must also meet the R&D intensity condition. 

A company is considered R&D intensive where its relevant R&D expenditure represents at least 30% of its total relevant expenditure. This threshold is calculated using the relevant expenditure of the company making the claim and, where applicable, its connected companies. This means the calculation cannot always be based solely on the figures of the claimant company. Groups and connected companies may therefore need to be considered when establishing whether the intensity threshold has been met. 

Where a company meets the ERIS conditions, it can benefit from the enhanced level of support available under the scheme. Qualifying expenditure receives an additional 86% deduction, giving an enhanced expenditure amount equal to 186% of qualifying expenditure. The company may then be able to surrender the relevant loss for a payable tax credit at a rate of 14.5%, subject to the applicable rules and limits. 

There is also a one-year grace period for certain companies that previously met the R&D intensity condition but subsequently fell below the 30% threshold. To benefit from the grace period, the company must meet the relevant conditions. These include having met the intensity condition in its previous 12-month accounting period and having made a valid SME relief or ERIS claim for that period on expenditure incurred on or after 1 April 2023. 

The grace period means that a temporary change in expenditure does not necessarily result in a company immediately losing access to ERIS. This can be particularly relevant where R&D expenditure fluctuates between accounting periods. 

Being an SME or carrying out substantial R&D activity is not, by itself, enough to qualify for ERIS. The company must establish that it meets the relevant SME requirements, is loss-making, satisfies the R&D intensity condition and meets the other requirements for the accounting period being claimed. 

Where these conditions are not met, the company may instead need to consider the Merged Scheme. A loss-making R&D-intensive SME that qualifies for ERIS can choose to claim under either ERIS or the Merged Scheme, but the same expenditure cannot be claimed under both schemes.