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.
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.