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Is there any assistance available?

Grants and subsidies may be available from State bodies such as Invest NI to assist with R&D projects.

Receiving a grant can affect the amount of relief an SME is able to claim. If the grant received is deemed to be state aid (e.g. an Invest NI grant) then no relief is available under the SME scheme. However, relief may be available under the large RDEC scheme instead provided that.

  • The expenditure would have been allowable under the RDEC scheme had the company been large, and
  • The expenditure is not eligible for relief under the SME scheme because it was subsidised.

In this case, the SME would be able to claim relief under the RDEC scheme with an 11% tax credit on all allowable R&D costs.

If the grant is not deemed to be state aid, then the R&D relief available to an SME under the SME scheme is reduced by the amount of the grant received i.e. the balance of expenditure not covered by the grant. Relief however, may be claimed by the SME under the RDEC scheme in respect of the grant received. E.g. if a company incurs R&D expenditure of £500,000 in carrying out R&D and receives a non-state aid grant of £100,000 towards the expenditure then £400,000 would qualify for relief under the SME scheme and the balance of £100,000 would qualify for relief under the RDEC scheme (provided conditions are met).

The receipt of grant aid has no impact on the R&D relief available to large companies.

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