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 for accounting periods beginning before 1 April 2024 there are two R&D tax credit incentives:
- research and development expenditure credit (RDEC), which can be claimed by any qualifying company
- more generous SME research and development tax credits for small and medium-sized enterprises
They have different qualifying criteria, but where possible you would naturally seek out the more generous SME R&D tax credit.
For accounting periods starting from 1 April 2024, the SME scheme has been merged into RDEC. There is still an alternative of enhanced support, but only for loss-making, R&D intensive small companies (where spending on R&D is at least 30% of total expenditure).
Eligibility for tax credits can be affected by any grants you received. 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.
