Myth Busters: R&D Tax Credits and Grant Funding

MYTH: My business receives grant funding, so I can’t claim R&D Tax Credits

Q: My accountant said my business is not eligible for R&D Tax Credits because it receives grant funding, is this true?
A: No! Even if you receive financial support through grant funding, in almost all circumstances your business is still eligible to claim R&D Tax Credits. In fact, 13% of R&D Tax Credit claims we submit are for businesses that receive grant funding.

This is a common misconception we hear from people who aren’t completely familiar with the ins and outs of the R&D Tax Credit schemes. But, The MPA Group’s industry experts are specialists in this area of tax relief, and have actually found that 90% of pre-existing R&D Tax Credit claims we audit are wrong.

Q: Can I claim R&D Tax Credits even if the grant funding is for a staff member who works on research and development activity?
A: Yes – receiving funding for products, processes or people involved in R&D doesn’t rule you out.

Even if the grant covers the entire R&D expenditure, you could still be able to claim.

Q: So receiving grant funding doesn’t affect my R&D Tax Credit claim at all?
A: That’s not quite the case, unfortunately! Grant funding can affect the total value of R&D expenditure you are able to claim for, and the R&D Tax Credit scheme you are eligible to claim under – potentially impacting the rate of relief you will receive.

If your business is eligible for grant funding, and conducts R&D activity, our specialist tax advisors can help you optimise the benefits of R&D Tax Credits and grant funding at any stage of the process. To maximise your return, speak to us before you apply for a grant.

Contact our expert advisors here or call 0808 208 5221 to set up a free five minute consultation