Can my business apply for both a grant and R&D tax credits?

Can my business apply for both a grant and R&D tax credits?

Many businesses require financial aid to offset the costs involved with innovative research and development projects.Ascertaining what kind of financial relief you should choose, however, can be difficult. Should you opt for help from R&D tax credits, a grant or both? Many businesses that receive grant funding assume that they aren’t eligible for R&D tax credits, but this is not necessarily true. Here, we explore what you need to know about grants and whether they impact your ability to make an R&D tax claim.

Grants and R&D tax credits

The first thing to note is that there are two separate schemes under which R&D tax relief can be claimed. The SME scheme applies to companies with under 500 employees and an annual turnover of less than€100 million. The RDEC scheme is for businesses that exceed either (or both) of these limits. Businesses that are eligible for the SME scheme cannot claim R&D tax credits for a project if they have received a State Aid grant for that same endeavour. If you are looking to make a claim, it must be handled under the RDEC scheme.

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Although a particular projectmay notqualify for research and development tax credits under the SME scheme, it doesn’t follow that the business as a whole is ineligible. Receipt of a notified State Aid grant for one project means R&D tax relief for that project must be claimed under the RDEC scheme; other projects that have not received State Aid grant funding, however, can be claimed for under the SME scheme.

Grants that are non-notified State Aid have less of an impact on R&D tax credit claims.Funding via Horizon 2020 and the Seventh Framework Programme (FP7), for example, can be used alongside an application for R&D tax relief, as long as they don’t distort the competition. Choosing this route means you can make a claim under the SME scheme for any costs that aren’t covered by the grant. Only the grant subsidised element of the project must be claimed under the RDEC scheme.

What’s right for your business?

Determining which option offers the most value to your business can be complex, so it’s worth seeking advice from an R&D tax specialist. Take into account how early you need the financial support – while grant funding is paid upfront, R&D tax credits must be claimed in retrospect.

A specialist can help you to identify whether a grant, an R&D tax claim or a combination of the two is right for your business. They can also provide information on which grant you should opt for, and assist with the R&D claims process, which many businesses find complicated.

Apply for R&D tax credits

R&D Tax Solutions offers specialist advice on R&D tax relief, and can assist with the completion of your claim. Contact us today on 0161 298 1010 to find out more.

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