R&D Funding Overview

Getting investment-ready

Whenever money's involved, preparation is key. That means explaining what your funding will be used for and, crucially, the return on investment. Key points include:

• A strong pitch to paint a clear picture of your objectives.
• Knowing the ins and outs of your business and figures. No one knows your business better than you.
• 1, 3 and 5 year plans to show long term ambition and ROI.

Types of funding available

SEIS & EIS

SEIS:

SEIS focuses on early-stage companies of up to two years old, offering 50% Income Tax relief against the amount invested.

There's a lifetime cap of £150,000 when investing in SEIS-eligible businesses, with yearly investor tax relief benefits of up to £100,000. The following will apply:

• Income Tax relief of 50% against the amount invested.
• An exemption of Capital Gains Tax (CGT) from share sales if held for 3 years.
• 50% CGT write-off of the investment amount in the same tax year.
• Shares are generally inheritance tax free, providing they're held for an initial period of over 2 years.
• Share sale losses can be offset against CGT or Income Tax.
• Investors can carry back part or all of the investment in the preceding year.

EIS:

EIS is designed for SMEs up to 7 years old, with Income Tax relief of 30% against the amount invested.

Investors can invest up to £1m per tax year, with a lifetime cap of £12m - or £20m if the business is considered a ‘knowledge intensive company’.

Key EIS benefits include:

• Exemption from Capital Gains Tax (CGT) from shares sold after holding held them for 3 years.
• Deferral of up to 100% of investment amount against CGT incurred up to 1 year before or 3 years after disposal.
• If shares are held for an initial period of over 2 years, generally they are inheritance tax free.
• Share sale losses can be offset against CGT or Income Tax.
• Investors can carry back part or all of the investment in the preceding year.

Equity Funding

Equity funding can be suitable for businesses without the financial history or revenues to secure a business loan.

Why choose equity funding?

• You have little or no revenue.
• To bring additional expertise onboard.
• You're comfortable selling a stake in the company for quicker, greater growth.

Grant Funding:

Grants must be spent on pre-specified activities or resources. During the application, you’ll probably have to provide detailed budgets, along with expenditures and regular progress updates.

Key points about Grants:

• Usually, funders are looking to support a specific type of activity - which won't necessarily match your goals.
• With each funder having their own priorities and criteria, funding decisions can take time.
• Funders often have terms and conditions, which should be laid out in a contract.

Major Grant Providers

Some of the main grant providers we work with include:

• Innovate UK
• Local Authorities
• Local Economic Partnerships (LEPs)
• Chambers of Commerce

Patent box

Patent Box is a rewarding but under-claimed innovation scheme. It offers further deductions calculating taxable profits, with relevant intellectual property profits taxed at a reduced corporation tax rate of 10%.

R&D Bridging

For many companies using R&D Tax Credit, waiting for HMRC's cheque to arrive can be tough. ‘Bridging loans’ can be a real boost to businesses needing a quick cash fix.

Want to know more about funding opportunities and how we can help? Speak to us today.