The SME R&D Tax Credits Regime

The SME R&D Tax Credits Regime


The SME (Small and Medium Enterprise) R&D Tax Credits regime is a UK tax incentive to incentivise small and medium-sized enterprises for undertaking qualifying R&D activities.
The SME regime is the most rewarding of the three R&D Tax Credits regimes (the other two being RDEC and RDA), but in order to qualify, both the company and the R&D project/s need to meet certain criteria.

Qualifying Criteria

Main article: SME or Large
For a company to be eligible for the SME Tax Credits Regime, the company needs to:
  • Have fewer than 500 staff and either less than a €100M turnover or €86M of gross assets.
  • Be undertaking eligible R&D project/s, that is revenue in nature for tax purposes.
  • Not be subcontracted or funded for the specific qualifying expenditure being claimed.

SME Regime Benefit

The benefit of the SME regime depends on a number of factors, including whether the company is profit making or loss-making. Essentially profit-making companies can benefit from a 230% deduction from annual profits (including the normal 100% deduction). Loss-making companies can claim a payable tax credit of 14.5% of the surrenderable loss.

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