21.10.21 Funding Preparation

Are there any implications to claiming R&D tax credits if you secure the Innovate UK Loan?

Granted Consultancy has supported multiple companies with their applications for Innovate UK’s Innovation Loans. Over the years, we’ve developed a breadth of knowledge from advising these companies on all aspects of securing the loan.

The Innovation Loan has huge benefits and Innovate UK is set to continue releasing a number of these competitions, but, are there any implications to claiming R&D tax credits if you secure the Innovate UK Loan?

Consider your tax position

Firstly, it is really important to ensure that your tax position is considered and planned before the Innovation Loan is applied for; otherwise, the tax credits position could be adversely affected by a position that is already ‘fixed’ by the time the claim is made.

Clearly define your project

As the Innovation Loans offered by IUK are classed as state aid, the R&D tax incentives can only be claimed under the RDEC scheme for the eligible costs on the relevant project for which the loan is received. Therefore, it is important to ensure that the project is clearly defined so that the costs of that project can be ring-fenced and isolated from other costs which could still qualify for R&D tax credits under the more beneficial SME scheme.

When considering the Innovation Loan, the cost of ‘lost’ tax credits should also be weighed up (i.e. by virtue of forgoing an SME claim for an RDEC claim) against the benefits of obtaining finance which is ultimately repayable, as opposed to a grant.

We’re here to help!

Granted Consultancy have experienced bid writers who demonstrate innovation and have FD-level financial forecasting capabilities to prepare robust Innovation Loan applications and R&D Tax Credits claims. Talk to one of our team today to give your business the best chance of securing funding.


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