Fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups fall into this category.
Deduction of an extra 130% of qualifying costs from profits in addition to the normal 100% deduction.
If the company makes a loss, you are able to claim a 14.5% tax credit of the surrenderable loss.
The staff, turnover and balance sheets of any connected companies should be included in the figures when assessing if you are an SME. Your company is connected to another company if:
a) it holds over 50% of the voting rights in another company
b) another company holds over 50% of the voting rights in your company
You need to include a proportion of the staff, turnover and balance sheets of any partner companies in your figures when assessing if you are an SME. The proportion to include is based on the percentage of ownership. You have a partner company if:
a) a company holds over 25% of your voting rights or capital
b) you hold over 25% of another company’s voting rights or capital
Even if after including any connected or partner companies, your calculations show that you are classed as an SME, there are other restrictions stipulated by HMRC that may prevent you from claiming SME R&D relief. However, you may still be able to make a claim via the R&D Expenditure Credit (RDEC) scheme.
If your company has no external investors and isn’t part of a group, you only need to count your own company data in assessing if you are an SME.
When working out your R&D expenditure there are many costs that are qualifying, but there are also many that you might think are qualifying, but disappointingly are not.
HMRC also impose various restrictions on qualifying costs, but we can help you identify exactly what costs are applicable to maximise the benefit to you.