Research and development is essential to the progress of technology and the development of industry. To support your businesses R&D, the UK government offers both innovation funding and R&D tax credits. In this article we have outlined both so that you can get the support you need to develop your business.
Innovate UK is part of UK Research and Innovation. This is a group of funding opportunities designed to support innovative ideas with grants, loans or procurement. Each opportunity has its own eligibility criteria and offers a different level of funding or support.
Who is Eligible?
This is a government-backed funding and any UK-based business or research organisation may be able to compete for this funding. Each funding opportunity is different and will carry its own eligibility criteria.
What Can I Use This Grant For?
- research and develop a process, product or service
- test your innovation ideas
- collaborate with other organisations
You can search for relevant opportunities and apply for innovation funding here.
Below are some current grants that offer great opportunities to fund R&D. These competitions will be open for a limited time so to see what grants are currently available for your business go to the innovate UK website.
1.The Sustainable Innovation Fund
The government is offering funding to support UK registered businesses with ideas focusing on sustainable economic recovery from covid-19. Companies with successful applications will receive a share of up to £26 million. The funding will support new projects Proposed by businesses of any size. COVID-19 has affected R&D across all sectors, and the aim of this competition is to help all sectors of the UK recover, grow, and create new opportunities from the aftermath of the global health pandemic.
This competition is open to single applicants only. Find out more and apply for this funding here.
2.Using digital technology to support psychological therapies (SBRI competition)
3. IETF deployment of energy efficiency technologies in industry
Organisations can apply for a share of up to £30 million for grants for energy efficiency projects that reduce fuel bills and carbon emissions. Your project must focus on deployment of technology that has been proven to work through successful operations and/or is qualified through test and demonstration. The technology must improve the energy efficiency of an industrial process or processes. Your project must only be possible because of this funding.
You can find out more and apply for this funding opportunity here.
R&D Tax Credits
R&D tax credits are a government incentive designed to reward businesses for investing in Innovation. These Tax Credits can be a valuable source of cash for companies and can be used to hire new staff, reinvest in R&D and grow their business.
How Do They Work?
If your company is spending money on innovation you are most likely eligible for R&D tax relief. Any company that spends money developing new products, processes or services; or improving old ones qualifies for this tax credit. When you apply for an R&D tax relief you make a choice to receive either a cash payment and/or corporation tax reduction.
For anyone making a claim for the first time, generally you can claim R&D tax relief for your last two completed accounting periods.
Am I Eligible?
Qualifying for R&D tax credits if it’s very simple. To qualify your company must:
- Be a limited company in the UK that is subject to Corporation Tax
- Have carried out qualifying research and development activities
- Have spent money on these projects
How Much Are R&D Tax Credits Worth?
With R&D tax credits, the calculations will depend on your exact situation. However, as a rule of thumb as a profitable SME you can expect about 25% of your R&D costs refunded. if you’re making SME, you can expect about 33% back. If you are around breaking even, the amount you will be refunded can drop down to just 15%.
If you are a large company looking to claim R&D tax credits, typically you will get up to 10% of your R&D costs refunded.