ERIS: enhanced support for loss-making, R&D-intensive SMEs.

ERIS stands for enhanced R&D intensive support. It is the route for loss-making SMEs that spend a high proportion of their expenditure on R&D, for accounting periods beginning on or after 1 April 2024. It gives an extra 86% deduction, 186% in total, and a payable credit of 14.5% on the loss the company surrenders. It can pay more than the merged scheme.

HMRC's guidance treats the company as loss-making where it has a trading loss before the additional deduction is applied. A company with a trading profit before the deduction is not loss-making for this purpose and uses the merged scheme instead. The test is applied before the extra deduction, so the deduction itself cannot be what creates the loss.

It is the company's relevant R&D expenditure divided by its total relevant expenditure. For accounting periods beginning on or after 1 April 2024, the result must be at least 30%. Connected companies' expenditure is counted in the test, and payments made to connected companies are excluded from the total. Small differences in the figures can decide the outcome, so we check them closely.

HMRC's guidance defines it for the intensity test, with payments to connected companies excluded from the total and connected companies' own expenditure counted. The precise make-up of the figure needs checking against the company's own records. Our intensity checker accepts the figures you enter, and we confirm them with you on a call.

Yes. The test takes account of connected companies' expenditure, but excludes payments made to connected companies from the total. A group with several companies therefore cannot always look at each company alone. This catches out start-ups with a trading subsidiary or a sister company, and it can move a company either side of 30%.

A company can still meet the intensity condition if it met it in its last 12-month period and made a valid SME or ERIS claim on expenditure from 1 April 2023. It softens the cliff edge for a company whose intensity dips just below 30% in a later year. The conditions are strict, so our checker shows whether you may be within it.

First, check the figures, because a miscategorised cost can account for the gap. Then see whether the grace period applies. If neither helps, the company uses the merged scheme for that period, which still gives relief. Intensity is measured per accounting period, so timing and the mix of spending in the next period can change the answer.

By our arithmetic from the published rates, 186% of £100 is £186, and 14.5% of that is £26.97. So the maximum is about £27 per £100 of qualifying costs, provided the company has enough trading loss to surrender. Government guidance puts the overall range across the merged scheme and ERIS at between £15 and £27. The PAYE cap can limit the cash.

No. The payable credit of 14.5% is not taxable. That differs from the merged scheme credit, which is a taxable receipt and is reduced by notional tax. It is part of why ERIS can pay more than the merged scheme, where the credit is taxable and reduced by notional tax.

No. An ERIS-eligible company may use the merged scheme instead, but not both for the same costs. The choice is made in the claim. Because the qualifying cost rules are identical for both, the decision rests on the calculation, including the PAYE cap, available losses and how much cash the company needs now.

The company surrenders the lower of two amounts: 186% of its qualifying R&D costs, and its trading loss. The payable credit is 14.5% of the amount surrendered, and the surrendered loss can no longer be carried forward. A company whose loss is smaller than 186% of its R&D costs therefore receives less than the headline maximum. Our worked example below shows the arithmetic with a loss that is large enough.

The payable credit cannot exceed £20,000 plus 300% of relevant PAYE and NIC liabilities unless the company is exempt. A start-up with few employees can find the cap limits its claim. Unlike the merged scheme, there is no carry-forward of excess credit: the company surrenders only the loss the cap allows, and the unsurrendered loss stays available to carry forward.

Northern Ireland ERIS claimants are exempt from the overseas contractor and externally provided worker restrictions, and may opt out of the Northern Ireland provisions on the additional information form. Finance Act 2026 section 34 limits that exemption to ERIS claimants who have not opted out, for claims on or after 30 October 2024. It is a specialist point, so ask us.

Not always. ERIS usually pays more per pound of qualifying cost, but the PAYE cap, the amount of trading loss available and the future value of that loss can change the result. A company that expects to be profitable soon may value a different mix. We model both before recommending one. Do not assume without calculating.

The form asks for the intensity figures, the connected companies and the cost breakdown, so the claim can be checked against the 30% test. Every agent who advised on the claim must also be named. Inconsistent figures between the form and the return are a ready cause of questions, so we prepare the two together.

It is related but not identical. Under the old SME scheme the deduction was 86% and the payable credit was 10%, or 14.5% for R&D-intensive companies at a 40% threshold from 1 April 2023. For periods beginning on or after 1 April 2024, ERIS keeps the 14.5% credit and lowers the intensity threshold to 30%.