A number of changes have been made to the Small and Medium companies (SME) R&D tax credit scheme effective from the 1st August 2008, and to the Large company scheme from 1st April 2008.

The main changes are:

1 - Extension of SME R&D relief to larger companies - the definition of an SME for UK R&D tax relief purposes; doubles from 250 employees, 50 million euros turnover or 43 million euros balance sheet 500 persons, 100 million euros and 86 million euros respectively. (1st August 2008)

2- Rates of R&D relief - The relief for SMEs increased from 150 per cent to 175 per cent (1st August 2008) and relief for large companies increased from 125 per cent to 130 per cent. (1st April 2008)

3 - Companies in difficulty - The Finance Act 2008 introduces new rules which prevent 'companies in difficulty' from claiming SME R&D tax relief under the SME R&D tax scheme. A company will be regarded as being 'in difficulty' if its latest published accounts are not produced on a going concern basis. A company will also be prevented from claiming relief if its going concern status is based on the expectation of it receiving SME R&D relief or tax credits. If a company ceases to be a going concern after making a claim for SME R&D relief it will be treated as if the claim had not been made and the company will receive no tax relief or tax credit payments. (1st August 2008).

4 - Cap on R&D aid - The Finance Act 2008 introduces a cap of €7.5 million on the total amount of SME R&D aid a company can receive in respect of a particular R&D project. (1st August 2008).

Further news will appear here.