Understanding Special R&D Tax Rules for Northern Ireland SMEs

How Does ERIS Work?

ERIS provides extra support to loss-making SMEs that spend at least 30% of their total costs on R&D. If a business meets that threshold, it can claim an additional 86% deduction on top of the usual 100% (making 186% in total). It can also choose to surrender the R&D-related trade loss for a 14.5% tax credit.

How is ERIS Different for Northern Ireland SMEs?

R&D-intensive SMEs with a registered office in Northern Ireland follow separate rules.

This is due to the Northern Ireland protocol, created after Brexit, which places restrictions on how ERIS applies there. The extra benefit NI companies receive through ERIS is capped at a rolling three-year total of €300,000. If a business reaches that limit, it can still claim under the merged RDEC scheme.

A further point is that NI-based companies can still include overseas R&D spend in their claims, unlike the rest of the UK.

What Counts Towards the Limit?

For ERIS claims, the amount above what the merged RDEC scheme would have provided goes toward the €300,000 cap. Other sources of relevant aid (for example, grants) also count toward this three-year limit.

How Will This Affect Clients?

Businesses planning to claim R&D should check:

• Whether they have a Northern Ireland registered office.
• If they qualify as R&D-intensive (the 30% threshold).
• How much their ERIS claim exceeds the merged RDEC scheme.
• Whether any other aid adds to the same €300,000 limit.
• Their rolling three-year total of aid and relief.

Reaching the cap does not end all R&D claims. It only means that future claims continue under the merged scheme rather than ERIS.

In Conclusion…

These changes can be complex, and HMRC is paying closer attention to compliance. If you think the Northern Ireland rules might apply to your business, it is wise to seek professional advice. A knowledgeable advisor can help ensure you stay compliant and make the most of the relief on offer..

If you have any further questions about the special rules for Northern Irish companies or R&D tax relief in general, please get in touch with VISIATIV. A representative will get back to you to discuss your unique needs and explain how we can assist