Innovation Grants You Can Use With R&D Tax Credits
Published 18 March 2021
Have you ever considered that you could be rewarded for the innovations your business is undertaking? Perhaps even to the extent that the work you do is paid for?
This is a very real and attainable opportunity. Yet so many businesses miss out on their chance to recover costs associated with research and development (R&D). We want to make sure you aren’t one of those businesses.
Learn what R&D tax relief is, how you can apply for it and the different innovation grants you may be able to use alongside it. Armed with this knowledge, gain the freedom to pursue exciting projects and opportunities that help your business thrive.
What is Research and Development?
Research and development isn’t exclusive to work carried out in laboratories by scientists. It can apply to any project from a business in any industry that involves research, experimentation and product development.
For example, you could be a construction business looking to reduce your carbon footprint. You experiment with different materials and ways of working that are greener than industry standards. The work you do to achieve this goal qualifies as research and development because you’re driving innovation in the business to improve your practices and that of the industry.
R&D tax relief
SMEs can reclaim up to 33% of qualifying expenditure in corporation tax credit. Your business should have less than 500 staff and a turnover of under €100 million or gross assets of under €86 million.
For large companies, it is 13% of your qualifying R&D expenditure under the RDEC scheme.
Eligible costs include:
- staff costs
- subcontractor and freelancer costs
- materials and consumables
- certain types of software
- payments to the subjects of trials or failed projects
It’s easier to submit a claim than you probably think.
How to claim R&D tax credits
Working with R&D tax specialists is the easiest and fastest way to get an ROI on your innovation projects.
The process works like this:
- You have a quick chat with a R&D specialist to identify the activities in your business that qualify for R&D tax credits
- A chartered tax advisor will ask to see your financial information around your innovation projects to craft a story of why you’re eligible for HMRC
- They will send the information to HMRC on your behalf and you can expect to see funds in your account between six to eight weeks
Innovation grants you can apply for now
The following grants, all of which are funded by Innovate UK, are aimed towards businesses undertaking R&D projects. Unlike the R&D tax relief schemes, some of these grants (also referred to as competitions) are aimed at businesses in specific industries such as manufacturing and electric vehicles.
All of the below grants can be used in conjunction with R&D tax credits to gain funding for your innovative projects.
They are available to apply for now up until the specified closing date.
Innovate UK Smart Grants
- Closing date: 26/05/2021
- Total fund: £25,000,000
The Innovate UK Smart Grants scheme is for UK-registered businesses of any size. Applications can come from any area of technology and be applied to any part of the economy. It is also applicable to research and technology organisations (RTOs).
Apply for a share of up to £25 million from Innovate UK which is part of UK Research and Innovation (UKRI), the national funding agency investing in science and research in the UK. Its aim is to help UK businesses deliver game-changing and commercially viable R&D innovation that can boost the UK economy.
Eligible organisations must be or collaborate with at least one micro, small or medium-sized enterprise. You must also plan to carry out research and development projects in the UK.
Qualifying projects must start by 1st November 2021 and end by 30th November 2024. It can be a single or collaborative project.
You will need to complete the Equality, Diversity and Inclusion (EDI) survey as part of the application process.
IETF Deployment of Energy Efficiency Technologies
- Closing date: 14/07/2021
- Total fund: £40,000,000
The IETF Deployment of Energy Efficiency Technologies grant (funded once again by Innovate UK) aims to improve the energy efficiency of industrial processes, reducing energy bills and cutting carbon emissions. It is the second round of the IETF Phase 1 competition.
Up for grabs is a share of up to £40 million for UK businesses registered in England, Wales or Northern Ireland awarded for deployment projects.
Eligible businesses must be industrial and operate a site in the above areas which fits into one of these categories of activity:
- Manufacturing (SIC codes 10000 through to 33200)
- Data centre (SIC code 63110)
For your project to qualify, it needs to start by 1st January 2023 and end by 31st December 2024. It also requires a minimum total grant funding of £100,000. You can include multiple projects within your application but need to make sure that:
- All projects are located at the same eligible site
- All individuals elements are eligible
Driving the Electric Revolution: Supply Chains for Net Zero
- Closing date: 30/06/2021
- Total fund: £20,000,000
In 2019, the UK became the first major economy to pass the net zero emissions law. This grant was created to help UK businesses in the transport, energy and industrial sectors contribute to this goal.
More specifically, it’s aimed to facilitate the UK’s niche and volume supply chain and manufacturing capability growth in electronics, machines and drives (PEMD).
Applicable future projects should be aimed at helping the UK achieve the objectives of the Driving and Electric Revolution Challenge (learn more). Your project must also start by 1st February 2020 with an end date of 31st January 2025 and last between 18 and 36 months. Total eligible costs are between £500,000 and £5 million.
Eligible organisations must be a UK-registered business of any size and the project must be carried out in the UK.
More innovation grants
You can also check out the Expression of interest: ISCF Smart Sustainable Plastic Packaging Demonstrators grant. Please note that the closing date is 24th March 2021.
For a list of all the competitions, visit GOV.UK’s dedicated page.
Do you have other questions about R&D tax credits or the other innovation grants mentioned above? We’d love to help. Call us on 0800 3277514, visit our website or email us at firstname.lastname@example.org.
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