If your organisation is conducting research and development (R&D) of any description, then there’s a good chance that this activity can be subsidised. Both public sector and non-public sector organisations recognise the importance of R&D. Since economic growth, productivity growth and wider socio-economic progress depends on successful R&D, support is made widely available.
This article looks at some of the ways your organisation can access R&D funding.
R&D Tax Credits
One of the most common, well-known and successful funding opportunities for UK business conducting research and development is R&D tax credits. R&D tax credits will typically apply to SMEs, who have less than 500 employees and less than £100m a year in turnover. Larger companies can also benefit under a separate R&D legislation.
R&D tax credits essentially act as a partial refund for some of the expenses incurred throughout the process. Though it may not seem obvious at first, many of a business’s day-to-day activities and overheads can be attributed to R&D, and therefore qualify for tax credits. This includes: a % of employee’s salaries, software licences, utilities costs and miscellaneous costs. Subcontractor costs can also be claimed, but only 65% of these.
What’s more, tax credits can be backdated by 2 years from the end of the accounting period, meaning your company could qualify for a significant sum of money.
Knowing what is attributable to R&D and what isn’t is key to a successful application. Getting the R&D tax credits form right can be a challenge, so we would suggest seeking professional guidance here. We recently spoke to Richard Armstrong at Catax, who was able to offer us professional guidance, and is highly recommended if you wish to find out more.
Patent Box Legislation
Another under-utilised tax relief legislation, that covers both SMEs and larger organisations, is the Patent Box Legislation.
Patent Box Legislation can be seen as a follow on to R&D credits. The purpose of Patent Box Legislation is to encourage companies to commercialise IP in the UK, offering a discount on corporation tax from 19% to 10%. Patent Box Legislation can prove particularly valuable in the long term, as the discount typically lasts for 20 years.
Like R&D tax credits, it is best to consult a professional to maximise your chances of success. Again, Richard Armstrong at Catax is a professional in this field, and his contact information can be referred to you by following emailing here.
Depending on where in the UK you are operating, there are several opportunities to access funds that are targeted at specific regions. RGF and eRGF funds are key examples of funding opportunities that are aimed at pushing development in specific regions. What’s more, many of these funds will have an industry focus, and allocated particularly for research and development.
The advantages of these funds is that if your organisation qualifies, they’re less competitive than alternative funding methods which are further reaching and therefore will have more applicants.
National funding opportunities are those that are open to any qualifying applicant in the UK. Typically, these types of funds are provided by funding bodies such as Innovate UK. They include closed funding types, which have a particular area or industry of focus or more open funding types, which accept applications from a wide range of industries.
Closed funding opportunities are much more common. They have a specific role, process or industry focus, typically with a specific goal in mind. Like regional funding, the fact that these opportunities are more specific gives your business a higher chance of success (if you qualify), as there is less competition. Open funding opportunities on the other hand (such as SMART) are more competitive, however since their scope is wider, your business is more likely to qualify.
International funding opportunities are mostly made of those provided by the European Union. At the time of writing, the future of these funding schemes is unfortunately at risk due to the United Kingdom’s departure from the EU.
Having said this, on the 24th of December, the UK struck a deal to continue accessing European research funding. This means that Horizon Europe, a significant international fund for research in Europe is still accessible to UK organisations. Horizon Europe will provide €95bn towards research and development between 2021-27, and though the specifics of the programme are yet to be unveiled, it can be assumed that a considerable portion will be accessible to UK companies. Similar opportunities for individual research funding exist through the european research council, with set amounts available for individuals at specific stages in their careers.
It is not just the EU that funds international research and development projects. The UK government also provides international research funding. The Global Challenges Research Fund for example, offers funds ranging from individual levels up to organisational partnerships. In fact, there is a whole host of UK lead international research funding opportunities, with another key example being the Newton Fund.
In summary, if you’re conducting R&D in the UK or abroad, there are a whole host of funding opportunities available, with those mentioned in this article only scratching the surface. Each funding opportunity has its own strengths and weaknesses, so make sure to do your research beforehand. Remember, the more specific the opportunity you qualify for, the less likely you are to face competition, so make sure to get those applications in!