What is R&D for SME’s? How does the scheme’s definition differ? The definition of what is considered an SME for R&D Tax Credits purposes is not necessarily the same as used elsewhere by HMRC in relation to other areas of Corporation Tax or other tax areas such as PAYE, or by other government agencies.
Here, HMRC uses the following:
An SME is a company or organisation with fewer than 500 employees and either of the following:
- an annual turnover not exceeding €100 million
- a balance sheet not exceeding €86 million
Additionally, it is important to note that HMRC also considers aggregation a factor. Meaning that if an investor who is not an SME (by this definition) owns 25% or more of a company, then the company will often not be considered an SME (instead, the whole “group” will be considered in aggregate.