In this series of blogs, we’ll be taking you on a deep dive into the main differences between the SME and RDEC schemes and the new RDEC and ERIS schemes for R&D tax relief, making sure you know what additional information you’ll need to gather to prepare a claim under the new regime. So far, we’ve covered overseas costs, subcontractors and externally provided workers (EPWs).
This week we’re looking at splitting the costs between the RDEC and ERIS schemes. We’ll discuss why you need to think about this, how it affects the tax benefit, and what you need to fill out the AIF.
Under the old SME and RDEC R&D tax relief schemes certain aspects of the projects themselves dictate which scheme the costs should be claimed through.
For example, if an SME carries out R&D as a subcontractor, the subcontracted R&D projects have to be claimed through RDEC. Grant funded projects might be fully or partially claimed through RDEC, depending on the type of grant.
The key point here is that the rules are clear which scheme the costs of each project should be routed through, and the claimant company has no choice in the matter.
Under the new RDEC and ERIS schemes, the only deciding factor in how a claim can be routed is whether the claim meets the ERIS criteria. If these criteria are met, it’s then entirely up to the claimant company to decide how much of the qualifying expenditure to route through each scheme.
On the face of it, the ERIS scheme seems the obvious choice – it’s designed to give extra tax benefits to companies that invest heavily in R&D, so it’s fair to assume that the benefit will always be higher through ERIS. However, this isn’t always the case!
For example, a company with small losses and relatively low qualifying spend will find that their tax benefit is higher through RDEC than ERIS. It’s therefore vital to check the tax benefit available through both schemes before deciding how to route the spending.
Good question! As it’s purely an accounting treatment, and thus the choice is up to the claimant company and their advisers, it’s difficult to see how the company would benefit from splitting the claim. We therefore expect to see most claims being routed wholly through RDEC or ERIS.
On the other hand, if a company knows that they meet the ERIS criteria in one year and doesn’t expect to in the following year, there is some benefit in routing some portion of the claim through ERIS in order to meet the grace period criteria.
To fill out the AIF, you need to know:
As stated above, there’s nothing about the claim or the project that dictates how much spend can be claimed through each scheme, how these costs break down, or how each project should be routed.
All costs and projects are equally eligible for both schemes, so the choice of how to route the costs is entirely down to the claimant and can be done on any basis that suits them.
In summary, understanding how to split costs between the RDEC and ERIS schemes is a crucial part of preparing a robust and compliant R&D tax claim under the new merged regime.
While it may seem straightforward to route all claims through the ERIS scheme, the reality is more complex. The tax benefit can vary depending on the company’s financial position, so it’s essential to carefully assess the benefit available through both schemes before deciding how to allocate costs.
Additionally, accurate reporting in the Additional Information Form (AIF) is critical to ensure compliance with HMRC’s requirements.
Our app allows you to decide at the review stage if, and how, you want to split the expenditure between RDEC and ERIS, ensuring that your claims are accurate, compliant, and optimised for the best possible outcome for your client.
If you’d like to see how WhisperClaims can support your firm with the new scheme, why not book a demo today?
Subscribe to email updates
© 2025 Wobbegong Technology Ltd (Registered number 10754811), trading as WhisperClaims.
WhisperClaims is a registered trademark of Wobbegong Technology Ltd (Trade Mark No.: UK00003360482).
