Supercharge your grant funding with R&D credits

Business couple applying for grant funding with R&D credits in an office

Have you received grant funding? If the answer is yes, the chances are that your business is doing something innovative. It's also a good bet that some extra funding would come in handy - it's often expensive carrying out research and development (R&D)

The good news is there are other sources of funding available. Better still, there are some you may not have realised could work for you. There's a common misconception that being in receipt of grants prevents you benefitting from other sorts of funding - in particular, R&D tax credits.

Here we clearly explain what you can and can't do when using R&D tax credits in conjunction with grants. One thing is for certain; if you qualify for R&D tax credits, you should certainly consider making a claim.

Why the confusion?

First of all, it's important to understand that there are two R&D tax credit incentives:

  • the SME R&D tax credit scheme, which provides a benefit of up to 33p for every pound spent on qualifying costs;
  • RDEC (Research and Development Expenditure Credit), which is worth up to 10.5p for every pound spent on qualifying costs.

They have different qualifying criteria, but where possible you would naturally seek out the more generous SME R&D tax credit.

Eligibility for tax credits can be affected by any grants you receive.  You cannot claim SME tax credits for costs covered by grants, but may be able to claim RDEC.

Historically, if you received grants worth more than €200,000, this counted as 'notified state aid' under EU rules. Projects covered by these grants would not qualify for the SME credit at all. But these rules have changes since Brexit.

By working with a specialist, you can strategically plan to put yourself in the best position to benefit from both grants and R&D tax credits. It can make a huge difference to the total level of funding you may receive.

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