Enhanced R&D Intensive Support (ERIS)

Enhanced R&D Intensive Support is part of the UK's reformed R&D tax relief regime. It provides targeted relief for R&D-intensive, loss-making SMEs.

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30% threshold Qualifying R&D expenditure must be at least 30% of total expenditure for the period.

186% deduction Qualifying R&D costs attract a total 186% deduction.

Up to 14.5% Payable credit rate on eligible losses surrendered.

What is ERIS?

ERIS provides targeted relief for R&D-intensive, loss-making SMEs, delivering approximately £500 million of additional support annually.

The aim is to help support smaller, highly innovative firms, particularly pre-profit start-ups that reinvest a large share of their expenditure in R&D but often face difficulties raising sufficient capital.

ERIS maintains the more generous support of the former SME scheme for these companies, while other firms now claim under the merged scheme.

Targeted R&D support

A separate route for qualifying loss-making SMEs

Companies that do not meet the ERIS criteria, either because they are profit-making or fall below the R&D intensity threshold, can still claim under the merged RDEC scheme.

ERIS eligibility

To qualify for Enhanced R&D Intensive Support, a company must meet the following conditions.

Be an SME

The company must have fewer than 500 staff, an annual turnover under £100 million or a balance sheet under £86 million.

Be loss-making

The company must be loss-making for tax purposes in the claim period before R&D deductions.

Meet the 30% threshold

Qualifying R&D expenditure must be at least 30% of total expenditure for the period.

Include connected enterprises

All R&D and total costs across the company and its connected enterprises must be included in the calculation.

Grace period

A company that qualified in the previous year may claim ERIS again even if it narrowly falls below the 30% threshold in the current year.

Key features and benefits

ERIS preserves enhanced support for qualifying loss-making R&D-intensive SMEs.

186%

Total deduction

Qualifying R&D costs attract a total 186% deduction, made up of the 100% standard deduction plus an 86% uplift.

14.5%

Payable credit rate

A payable credit rate of up to 14.5% applies to eligible losses surrendered.

Business professionals discussing R&D tax relief

From April 2024 The UK reformed its R&D tax relief system while ERIS remained as a separate route for qualifying companies.

What changed from April 2024?

The UK reformed its R&D tax relief system, including changes to the previous SME and RDEC schemes and the R&D intensity threshold.

SME and RDEC schemes merged The old SME and RDEC schemes merged into a single R&D credit system.

ERIS remained ERIS remains a special route for loss-making SMEs meeting the R&D intensity threshold.

Threshold reduced The R&D intensity threshold was reduced from 40% to 30%.

Overseas R&D restrictions tightened Costs are only eligible if UK activity is not possible.

ERIS example

A biotech start-up that has not yet started generating revenue spends £280,000 on qualifying R&D activities. Its total trading expenses for the year are £800,000.

R&D intensity is calculated by dividing the R&D spend by total costs under GAAP plus capitalised R&D costs.

In this example, £280,000 divided by £800,000 gives an R&D intensity of 35%.

R&D intensity calculation £280,000 ÷ £800,000

Qualifying R&D spend £280,000

Total trading expenses £800,000

Resulting R&D intensity 35%

Year ending 31 December 2024 Threshold: 40%. At 35% intensity, the company does not qualify as R&D intensive.

Year ending 31 December 2025 Threshold: 30%. At 35% intensity, the company does qualify.

ERIS in summary

ERIS is a targeted enhancement within the UK's reformed R&D tax credit system.

From April 2024, it ensures that loss-making SMEs investing heavily in R&D continue to benefit from the support of the former SME scheme, while other firms move to the merged scheme.