What are the different types of R&D tax credit schemes?

As of 1 April 2024, the UK R&D tax relief system consists of two primary forms of support: the merged R&D scheme and Enhanced R&D Intensive Support (ERIS). These changes were introduced by HMRC to simplify the R&D tax credit relief regime and provide additional support to certain loss-making, R&D-intensive SMEs.

The Merged R&D Scheme:

The merged scheme applies to most companies with accounting periods beginning on or after 1 April 2024. It combines elements of the previous SME and RDEC schemes into a single framework and introduces revised rules for subcontracted R&D and contracted-out R&D activities.

Enhanced R&D Intensive Support (ERIS):

ERIS is available to certain loss-making SMEs that meet the R&D intensity requirements. It provides a higher rate of relief for companies where a substantial proportion of total expenditure is incurred on qualifying R&D activities.

However, if your accounting period begins before 1 April 2024, your R&D tax relief claim will generally fall under one of the following 2 schemes:

The SME Scheme:

Offers R&D tax credits to SMEs (small and medium sized enterprises) that have fewer than 500 employees, have an annual turnover of under €100m, and a balance sheet under €86m.

The RDEC Scheme:

Offers R&D tax credits primarily to large companies, but was also available to certain SMEs in specific circumstances, such as where R&D activities were subsidised or contracted out by another company.