Enhanced R&D Intensive Support (ERIS)

Enhanced R&D Intensive Support (ERIS) is the R&D tax relief for loss-making SMEs whose relevant R&D expenditure is at least 30% of their total relevant expenditure. It pays a cash credit worth up to 26.97p per £1 of qualifying spend, the most generous rate in the current UK system, against 16.2p for the same company under the merged scheme. It applies to accounting periods beginning on or after 1 April 2024.

If you want to know straight away whether you pass the 30% test, our ERIS intensity calculator works through the ratio, including connected companies.

Who qualifies for ERIS?

A company qualifies for ERIS in an accounting period if it meets all three of these conditions.

1. It is an SME. Fewer than 500 staff, and either turnover under €100m or a balance sheet under €86m. Connected and partner enterprises are aggregated, so a company that looks small on its own can fail the test through its investors or group.
2. It is loss-making for the period.
3. It is R&D-intensive. Its relevant R&D expenditure is at least 30% of its total relevant expenditure, with connected companies included on both sides of the ratio.

A company that misses any one of the three claims under the merged scheme instead, where loss-makers still receive 16.2p per £1 in cash. If you are not sure which side you fall on, start with which R&D scheme applies to your company.

How is the ERIS credit calculated?

In two steps. First, the company deducts an additional 86% of its qualifying R&D expenditure from its taxable profits, on top of the normal 100%, giving a total deduction of 186%. Second, it surrenders the resulting loss to HMRC for a payable credit of 14.5% of the surrenderable amount. Unlike the merged scheme credit, the ERIS credit is not taxable, so nothing is clawed back from the headline figure.

Here is the standard worked example, for a company with £100,000 of qualifying spend and sufficient losses:

£100,000 x 186% x 14.5% = £26,970 payable credit.

That is 26.97p per £1 of qualifying expenditure, paid in cash. The “up to” matters: the full rate assumes losses at least equal to 186% of the qualifying spend. Where the company’s losses are smaller, the surrenderable amount falls and the credit falls with it. Companies can also choose to surrender less and carry losses forward, a decision that depends on when they expect to reach profit.

For an estimate on your own numbers, use the claim value calculator.

How does the 30% intensity test work?

Divide your relevant R&D expenditure by your total relevant expenditure. If the result is 30% or more, you pass.

A worked ratio makes it concrete. A pre-revenue company spends £800,000 in the year, of which £300,000 is relevant R&D expenditure. Its intensity is £300,000 divided by £800,000, which is 37.5%, comfortably over the threshold. Now suppose the same company scales up its commercial team and total expenditure rises to £1,100,000 with R&D unchanged. Intensity drops to just over 27% and the test fails, even though the R&D itself has not changed at all.

Two features of the test catch companies out.

Connected companies count on both sides. The ratio is worked across the company and its connected companies together. A deeply R&D-intensive company connected to a larger trading business can fail on the group numbers despite passing comfortably on its own.

Total expenditure moves the ratio as much as R&D does. Hiring a sales team, a large one-off cost, or a step up in overheads can push a previously intensive company under 30%. This is worth modelling before year end, not discovering after it.

The ERIS intensity calculator handles both points.

Can a profitable company claim ERIS?

No. ERIS is only available to loss-making SMEs, however high their R&D intensity. A company that becomes profitable claims under the merged scheme for that period, where the 20% credit is worth 15p per £1 at the 25% corporation tax rate and 16.2p where the 19% rate applies. For companies approaching break-even this creates a real planning question, because the value of each pound of R&D spend changes with the tax position of the year in which it lands.

What is the grace period?

A company that qualified for ERIS in one period gets a one-year grace period if its intensity then dips below 30%. The following period can still be claimed under ERIS provided the other conditions are met, so a single lumpy year of spending does not immediately cost the company its 26.97p rate.

The grace period is a buffer, not a plan. A company whose intensity is trending downwards should model when it will move to the merged scheme and what that does to its cash forecast.

What counts as an SME for ERIS?

Fewer than 500 staff, and either turnover under €100m or a balance sheet total under €86m. The thresholds are stated in euros, and connected and partner enterprises are aggregated when testing them. Venture-backed companies should check the aggregation position early: the arithmetic on staff, turnover and balance sheet across linked enterprises is exactly the kind of detail that surfaces awkwardly during an HMRC check rather than before it.

How does ERIS compare with the merged scheme?

Both schemes share the same definition of qualifying R&D, the same cost categories, the same contracted-out and overseas rules, and the same compliance requirements. The difference is who claims and what it is worth.

Why does ERIS exist?

Because some companies are almost nothing but R&D. A biotech running preclinical programmes, a medtech taking a device through regulatory evidence, a robotics company still in prototype iterations: these businesses can spend years loss-making before first revenue, funded by equity and grants, with most of every pound going into the science. ERIS exists to give that group a higher rate than the merged scheme’s 16.2p, and the 30% intensity test is how it draws the boundary.

For those companies the credit is non-dilutive cash arriving during the deepest part of the loss-making curve, which makes the claim a planning matter, not an afterthought. We look at the intensity arithmetic for a typical pre-revenue burn profile in ERIS for pre-revenue biotech and medtech.

How do you claim ERIS?

Through the corporation tax return, with the same compliance steps as every current-scheme claim. First-time claimants, and companies that have not claimed in the previous three years, must submit a claim notification within six months of the end of the period of account; missing it invalidates the claim. Every claim needs an Additional Information Form submitted before or with the CT600. The PAYE cap applies to the payable credit, subject to the exemption for companies creating or managing intellectual property with low connected-party subcontracting.

ERIS claims attract attention because the rate is generous and the qualifying conditions are testable. HMRC checks roughly one in six R&D claims, and an intensity calculation that has not been evidenced is an easy target. Our page on HMRC R&D enquiries covers what a check involves; the short version is that the intensity ratio, the SME test and the loss position should all be documented at the time of the claim.

Talk it through with a chartered adviser

ERIS rewards exactly the companies we specialise in: R&D-intensive, often pre-revenue, where the credit is a material line in the cash forecast. LimestoneGrey is a firm of chartered tax advisers and chartered accountants specialising in R&D tax relief regulated by ICAEW, every claim is signed off by a chartered adviser, and enquiry support is included as standard.

If you want a considered view on your intensity position, the grace period, or a first ERIS claim, get in touch, or read on through the full R&D tax relief guide.

Written by Matthew Jones ACA CTA. Last reviewed July 2026.

Sources

• Merged scheme & ERIS guidance — the ERIS 186% deduction and 14.5% credit, the 30% intensity test and the PAYE cap.
• CIRD123000: ERIS intensity condition — the 30% intensity ratio, connected companies and the one-year grace period.
• CIRD140000: PAYE cap — the £20,000 plus 300% cap applied to the payable credit.
• R&D relief for SMEs — the SME definition of 500 staff, €100m turnover or €86m balance sheet.