VCM8167 | Venture Capital Scheme: knowledge intensive companies: the skilled employees condition

If a company does not meet the innovation condition it may still be a knowledge-intensive company if it meets the skilled employees condition.

A company meets the skilled employees condition if at the time of the investment and for the following three years at least 20% of the company’s full time equivalent (FTE) employees are skilled employees.

A skilled employee is an employee:

• who is directly engaged in the research and development or innovation activities of the company or group

• who holds a relevant higher education qualification of a Master’s degree or above

• whose job role requires them to hold a Masters qualification or above; for example an individual with a PhD in chemistry working as a lab technician would not be a skilled employee if the job does not require a Masters degree or a PhD.

It is expected that a company depending upon the skilled employees condition would normally significantly exceed the 20% threshold of its workforce comprising skilled employees at any time, usually up to around 80%. However the threshold is set much lower, at 20%, to avoid complicated rules that would be needed to allow the company to employ individuals who may not have the requisite qualifications but are experienced researchers, and to manage vacancies.

The number of full time equivalent employees is determined in accordance with ITA07/S297A(3) (see VCM55250)

Where the company is the parent of a group the proportion of skilled employees is taken over the whole group.