Loss-making R&D Intensive Small or Medium-sized Enterprises (SMEs) based in Northern Ireland will not be subject to any restrictions on relief for overseas Research & Development (R&D) up to a limit of £250,000 in any three-year period. 

  • From 1 April 2024 where the Research & Development (R&D) activity takes place overseas, subject to limited exceptions, Finance Act 2024 will restrict relief on expenditure incurred on Contractor payments for R&D, and externally provided workers.
  • Statutory Instrument 2024/348 has introduced a relaxation of the new rules. The restrictions on relief for overseas expenditure on contracted-out R&D and externally provided workers will not apply to affected companies. Affected companies:
    • Are SMEs that have claimed relief under the new Enhanced R&D Intensive Support (ERIS) scheme.
    • Have a registered office of the SME in Northern Ireland.
    • Satisfy one of the following:
      • Trades in goods.
      • Trades in generation, transmission, distribution, supply, wholesale trading and cross-border exchange of electricity.
      • Does not carry on any of the above trades and has not opted out by notifying HMRC.
  • For affected companies, the excess in the amount of benefit claimed under ERIS over the equivalent claim under the merged RDEC must not exceed £250,000 over three years (on a rolling basis).
  • Above this limit, relief will be available under the new merged scheme and the restrictions will continue to apply for any residual amounts claimed under the merged scheme.
  • Claims for ERIS that go over this limit are not allowed, and HMRC has the power to address any inaccuracies in tax returns.

Useful guides on this topic 

R & D & Patent Box
Find out all about Research & Development and Patent Box tax reliefs.

R&D: Staff costs, subcontractors & reimbursed expenses
What staff costs qualify for relief? Who are externally provided workers? Can you claim sub-contractor costs? Do reimbursed employee costs qualify?

Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?

External links 

Statutory Instruments 2024/348 The Research and Development (Chapter 2 Relief) Regulations 2024