The Chancellor has increased the size of businesses that can qualify for the SME Scheme of the R&D Tax Credit Programme. Now firms with up to 500 staff can potentially claim a refundable credit.

Also, the definition of qualifying R&D expenditure has been expanded to include amounts paid to clinical trial volunteers for payments made on or after 6 April 2006 under the Large Company Scheme. The date for the SME Scheme still has to be approved under the EC state aid rules.

Also proposed is the alignment of the deadlines for submitting R&D tax credit claims. Currently the deadline for the enhanced deduction falls under the general 6 year time limit, but the new proposal will bring this forward to 12 months after the due filing date of the corporation tax return for accounting periods ending on or after 31 March 2006. However, for accounting periods ending after 31 March 2002 but before 31 March 2006 there are transitional rules which give companies up to 31 March 2008 to file their claims.

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