A number of changes have been made to the Small and Medium Companies (SME) Research & Development (R&D) and Vaccine Research Relief (VRR) tax relief schemes which will all take effect from 1 August 2008. HMRC have announced the changes and a brief overview of how they will work.

The UK's SME R&D and VRR schemes are notified state aids. Those schemes, and any changes to them, must be approved by the European Commission before they can take effect. The EU Commission has now issued approval for changes to these schemes to:

• allow relief for clinical trial payments
• extend the SME R&D scheme to mid-sized companies
• increase the rate of SME R&D relief

1 August 2008 has been designated as the appointed day from which all these changes will take effect. Details of the announcement and the brief overview is available at http://www.hmrc.gov.uk/research/vrr-tax-relief-rules.htm

More detailed guidance is currently being prepared and will be published in the HMRC Corporate Intangibles and Research and Development (CIRD) manual shortly.