Can you change status from the R&D tax credit SME scheme to the RDEC scheme, or the other way around?

Your company's R&D tax credit status is likely to change over time as your business evolves.

This can be due to a variety of internal and external factors, such as changes in gross assets and legislation, as well as increases in turnover and employee numbers.


Because the SME scheme is more generous than the RDEC scheme, most businesses are likely to apply under the SME scheme if they can. 


However, when an SMEs exceeds the limits that apply to determining if a company is eligible for the R&D tax credit SME scheme -  they will have to move to the RDEC scheme. A large company, on the other hand, may find itself shrinking due to reducing its workforce or splitting into independent companies - and may transition to the SME scheme.


In both scenarios, the business's status will not change until the conditions are met for two years in a row, also known as the "year of grace." The year-of-grace provision, however, is suspended if a SME is acquired by a large company or group.


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When an SME receives a Notified State Aid, a Grant or receives funds from a Large Company for their projects, they will apply under the RDEC scheme even if their SME status hasn’t changed.


F6S can help with your R&D claim