Additional Support for R&D Intensive Enterprises

The UK government has announced additional support for research and development (R&D) intensive small and medium-sized enterprises (SMEs) following the recent cut in R&D tax credit rates. This relief package, which came into effect on 1st April 2023, aims to ensure that innovation and development continue to flourish among loss-making R&D-intensive SMEs by providing eligible companies with support.

The relief provides eligible companies with £27 for every £100 invested in R&D. Only SMEs are eligible for this relief, which is defined by HMRC as companies with fewer than 500 employees, an annual turnover of £100 million or a balance sheet of less than £86 million.

What does “R&D Intensive” mean?

To qualify for R&D intensive relief, SMEs need to ensure that their qualifying R&D expenditure covers at least 40% of total spending during the specific financial period. HMRC will calculate intensity as the proportion of an SME’s qualifying expenditure compared to its total spending. If an SME meets the eligibility criteria, it can claim R&D tax credits using the 14.5% credit rate for qualifying expenditures. If the SME is profitable or the threshold is not met, the new 10% rate will apply.

The intensity ratio used in this process doesn’t just apply to a single company but also to any connected companies. Therefore, it is essential for SMEs to identify eligible expenditures to make a fully compliant claim.

The recent changes to R&D tax credits are likely to hit loss-making R&D-intensive SMEs particularly hard. Many innovative businesses rely on R&D tax credits for reliable annual income to help fuel ongoing innovation. The changes recognise the impact of the new landscape and help ease the challenges for those most affected.

R&D intensive relief provides additional support for SMEs and recognises their importance to the British economy. The relief is designed to take the sting out of the changes made and help SMEs continue to innovate and develop. There are many benefits to opting for R&D tax credits over something else like a loan or investment, including that there is no need to pay the amount back, and no equity is lost.

Amidst uncertain times, and ever-changing R&D schemes, the UK government’s recent announcement of additional support for R&D-intensive enterprises is welcome news for businesses.

Sprk Capital R&D Tax Credit Loans & Grant Advance Funding

With SPRK Capital’s R&D tax credit loans, you can get advance funding on your R&D tax claim. SPRK Advances are an alternative, non-dilutive source of capital for those businesses. SPRK delivers this by positioning itself as the hub between R&D companies seeking capital, third-party data providers and expert R&D advisers.

Contact us today for more information on how we can help drive innovation within your business.

More recent posts:

  • Information

    Why the UK is Investing in Funding Biotech Innovation

    The UK government's recent announcements about innovation funding vividly demonstrate its commitment to making Britain a science and technology superpower by 2030. This commitment is a strategic implementation of substantial innovation finance to propel biotech to new heights.

    Read more
  • R&D Tax Credits

    How Agriculture and R&D Work Together

    The intersection of agriculture and research and development (R&D) in the UK is vital for innovation and sustainability. As the backbone of the British economy and a key pillar for food security, agriculture continuously benefits from advancements driven by R&D.

    Read more
  • Information

    Innovation Funding Options for Growth Companies

    For growth companies that are involved in market innovation, funding is as critical as it is strategic. These companies, characterised by their rapid scaling and reinvestment ambitions, are usually faced with unique challenges in financing their expansion.

    Read more
  • R&D Tax Credits

    What Do the Recent Changes to R&D Tax Credits Mean?

    Staying up to date with the recent updates to the Research and Development (R&D) tax credit system is incredibly important. If your business operates within UK Innovation R&D tax credits are a great tool to aid your cash flow.

    Read more
  • Announcements

    SPRK Announces Appointment of Finance Manager and Business Development Manager

    We are delighted to announce that Maria Padilla and Sam Mills have joined as Finance Manager and Business Development Manager, to continue providing non-dilutive finance to SMEs.

    Read more Download PDF