The South West is home to many pioneering businesses but it is not always clear how to access the funding for research and development (R&D). In fact, some businesses are not even aware that the innovative work they are carrying out is R&D.

I’ll have the opportunity to discuss this issue with businesses this week. Thomas Westcott is sponsoring the SW Innovation Expo, taking place in Exeter on 14 October, and I’m delighted to be attending with colleagues. I’m looking forward to meeting businesses from across the region and learning about their breakthroughs in cutting edge technology and innovative ideas.

The event will provide much-needed advice, support and motivation for established businesses and those looking to take the leap into starting up a new business. We will be on hand to share some ideas about accessing financial support to progress innovative ideas.

Without funding, innovative ideas can’t move forward. So, what financial support is available for businesses looking to create something new?

Research and development grants

There are many research and development (R&D) grants available, depending on where you are based. 

For example, applications for Innovate UK Smart Grants are open until 5 January 2022. This £25million fund is for “game-changing and commercially viable R&D innovation that can significantly impact the UK economy.

If you’re interested in accessing an R&D grant, your Growth Hub could be a good place to start. Led by Local Enterprise Partnerships (LEPs), Growth Hubs provide businesses with details of grants and local funding opportunities. 

The Heart of the South West Growth Hub covers Devon and most of Somerset. The West of England Growth Hub covers the areas in and around Bristol, Bath and North Somerset.

It is also worth checking what grants UK Research and Innovation has announced. Many of these grants are specific to particular sectors or outputs. It is important to know that many activities can be classed as R&D. For example, funding can sometimes be used to pay for a feasibility study, developing a new system or process. Your business may not have to be designing a cutting-edge new piece of technology to qualify. 

Businesses of all sizes and across sectors are being encouraged to reduce their carbon footprint to help tackle climate change. Many R&D grants are being launched as an incentive to encourage innovation ideas and developments into technology to help us towards a cleaner planet. 

Innovative R&D examples include designing solar technology to be built into architecture, or building a self-powered 5G Sea buoy. However, it might be that you are developing a procurement platform to enable the local sourcing of goods and services, for example. This could also qualify for some R&D grants. 

R&D tax reliefs

You may also be able to claim tax relief on innovative projects. To qualify for Research and Development tax relief, your project must be relatable to your businesses trade or future trade, and also involve science or technology. 

However, the definition of R&D is very broad. For example, projects that are helping to overcome scientific uncertainty, or achieve an advance in our overall knowledge could be classed as R&D. Activities that qualify for R&D tax reliefs include: 

  • Prototyping
  • Testing
  • Production trials
  • Design adaption 
  • Training to support R&D activities

SME R&D relief scheme

Smaller businesses may also be able to claim tax reliefs under the SME R&D relief scheme.

For your business to qualify for the relief, your business must:

  • Employ fewer than 500 staff
  • Have a turnover under 100 million euros
  • Be a UK registered business

The qualifying R&D costs are allowable expenses when calculating the company’s profits each accounting year. An additional 130% of the qualifying R&D costs are also deductible, which gives a total of 230% deduction of R&D costs for the company (also called Super-deduction). 

Qualifying R&D expenditure are included on your corporation tax (CT600) reducing the amount of corporation tax paid per your accounting period.

R&D tax credits are also available for those businesses that are loss making. You can claim up to 14.5% of the surrenderable loss.

Claims can also be backdated two years, resulting in a refund of corporation tax.

Many of our clients benefit from grants and tax reliefs to fund their innovative work. However, others are unaware that they might qualify.

To discuss how your business could benefit, speak to your usual Thomas Westcott advisor.

By This email address is being protected from spambots. You need JavaScript enabled to view it., Manager