Research and development relief for SMEs – state aid cap calculation

Where SMEs make a claim for R&D tax relief within the SME scheme, relief for any individual project cannot exceed €7.5m. In calculating whether this cap has been reached companies can ignore any aid which represents a notional amount which could be claimed under the large company scheme, which is not state aid.

The way in which companies obtain large company relief has changed, and with effect from 1 April 2016 relief will be available only under the above the line (ATL) method. The method by which the state aid cap is calculated will be changed to ensure that relief under the ATL method does not affect the cap.

This change should be neutral as it maintains the calculation of the €7.5m cap so as to operate in the same way for ATL as it did for the old method of giving large company R&D relief.