Innovation lies at the heart of a business’s progress and growth. In today’s rapidly evolving technological world, companies are constantly seeking ways to stay ahead of the curve. Research and Development (R&D) plays a crucial role in driving this innovation, but often requires significant financial resources. This is where innovation grants step in, providing funding and support to businesses undertaking R&D activities.
To guide us through understanding what innovation grants are we’ve asked Tom Whitworth, R&D Incentives Director, to explain more.
Take it away Tom
For those companies who have ambitious goals and need funding for their R&D plans, they often turn to R&D grants.
Below I’ve explained how R&D grants work, as well as outlining projects that might be suitable for funding, and explaining the difference between an R&D grant and R&D Tax Reliefs.
So, what is an R&D grant?
As mentioned above, an R&D grant helps to support the development of a business’s new and innovative products. Innovation grants often are offered by governmental bodies, like UK Research & Innovation (UKRI), but also via other organisations like local chambers of commerce.
How do R&D grants work?
Businesses that are seeking future funding for innovative projects can pursue R&D grants via a direct application process, which are created by the funding body. They will then ensure that the funding is granted to projects which are classified as appropriately relevant and valuable.
Projects that may qualify for R&D grants
There are a wide range of innovation grants available from both national and regional bodies, which are available to businesses and research organisations wanting to achieve goals such as:
- Development of new or improved products.
- Exploring opportunities in new areas.
- Strategic investment in new facilities, or plant and machinery.
- Job creation.
- Enhanced collaboration by seeking partnerships with other companies or organisations.
Types of innovation grants
Let’s take a look at the type of innovation grants that are available…
Research and Development
These grants specifically target businesses engaged in R&D activities. They aim to support projects that have the potential to drive technological advancements, enhance product development, or solve pressing societal challenges.
Start-up
Start-ups often face numerous financial hurdles in their early stages. Start-up grants provide a lifeline, offering funding and resources to help innovative ventures gain traction and establish themselves in competitive markets.
Industry-Specific
Many industries have their own unique challenges and requirements. Industry-specific grants are tailored to address these specific needs, fostering innovation within sectors such as healthcare, energy, agriculture, and more.
Collaborative
Collaboration often fuels innovation. Collaborative grants encourage partnerships between businesses, research institutions, and academia, leveraging collective expertise and resources to achieve innovative breakthroughs.
The difference between R&D grants and R&D Tax Reliefs
Whilst R&D grants are provided for qualifying businesses in the form of advance funding for a project, R&D Tax Reliefs are slightly different in that they offer tax relief,via the reduction of Corporation Tax liability or a payable tax credit, for development work already undertaken. R&D Tax Reliefs are extremely generous and can often be worth around 20% of the amount spent by a company on qualifying R&D.
It’s also worth noting that if a business obtains both an R&D grant and claims R&D Tax Reliefs, the latter may be impacted (i.e. its value may reduce). So careful consideration should be made of whether a particular R&D grant is worth applying for, and in turn the impact such a grant is likely to have on any R&D claim going forwards.
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