This article and short video explains ERIS (Enhanced Research and Development Intensive Support) which applies to some loss-making Small & Medium Enterprises (SMEs).
ERIS explained: Intensive Support for some loss making SMEs
🚀 ERIS (Enhanced Research and Development Intensive Support) is the R&D tax credit incentive designed to boost innovation for some loss-making SMEs, by paying out a higher incentive.
In the video, Jenny breaks down the essential things you need to know about ERIS.
Maximum Tax Credit
Using the ERIS claim calculation method (which is done in the tax computation), qualifying SMEs can claim up to 27% of their relevant R&D costs, as a cash payment. While under RDEC (Research & Development Expenditure Credit) the claim value is around 15% to 16% of relevant expenditure.
Eligibility Criteria for ERIS (applicable for accounting periods starting from 1st April 2024)
The company must have a trading loss in the relevant accounting period (before the R&D claim).
The company must meet the R&D intensity condition: which is that at least 30% of all expenditure was spent on qualifying R&D, in the accounting period for which the R&D claim is being made
ERIS vs. RDEC
Using the ERIS claim calculation method, is not always the right choice, even when you qualify, as sometimes RDEC will give a greater benefit than ERIS, so calculating the best option is crucial.
Generally, where a company has a loss, before the R&D claim is calculated, that is equal to or greater than their qualify R&D expenditure, the maximum level of benefit, at around 27% of qualifying R&D costs, will be available. Where the loss is very small compared to their R&D expenditure, RDEC is likely to be more beneficial, even if the company qualifies for ERIS.