Advising on the Implications of Subsidies and Grants
Understanding the implications of subsidies and grants is essential for any UK business preparing to claim R&D tax relief. Public or private funding can significantly influence the amount you’re able to recover from HMRC. Mistakes in this area may result in incorrect claims, delays, or even clawbacks.
At My Tax Consultants, we provide clear, reliable advice to help you assess how different types of funding influence your eligibility and claim value. From R&D tax relief subsidies to R&D tax relief grants, we help you apply the correct rules to every source of income and support.
How Grants Affect R&D Tax Relief
Grants come in many forms — from Innovate UK and EU Horizon funding to local council innovation support. However, not all grants have the same impact on your claim. It depends on whether the grant is classed as notified state aid, de minimis aid, or other forms of non-notified funding.
Grants affect R&D tax relief primarily by shifting the eligible project or costs from the SME scheme to the RDEC (Research and Development Expenditure Credit) scheme, which offers less generous benefits. Many businesses overlook this and mistakenly claim under the more favourable scheme.
Our team works with you to:
- Review your funding sources and classify them correctly.
- Determine how each grant or subsidy affects your claim.
- Allocate costs accurately between schemes to avoid errors and maximise legitimate claims.
Subsidy Impact on R&D Claims
Much like grants, subsidies can impact R&D claims by reducing the portion of the project that qualifies under the SME scheme. Even indirect funding can shift the claim status. For example, a subsidy used for general project delivery may affect R&D relief if it covers qualifying expenditure.
The exact subsidy impact on R&D claims will depend on how the funding is structured and what it’s applied to within the business. Misreporting these links can draw HMRC scrutiny.
At My Tax Consultants, we help you:
- Understand how subsidies influence the tax position of your projects.
- Identify the extent to which subsidies impact eligible expenditure.
- Prepare a claim that reflects these distinctions with clarity and precision.
Common Mistakes and How We Help Prevent Them
Many businesses fall into common traps:
- Misclassifying a grant as non-notified when it is notified state aid.
- Allocating costs funded by grants to the SME scheme.
- Failing to separate grant-funded and non-funded portions of R&D projects.
We offer hands-on support to review your documentation, funding agreements, and project spend to avoid these errors. Our approach prioritises accuracy and compliance, helping you prepare claims that stand up to HMRC review.
Who Needs This Advice?
If your company receives any form of external funding—whether public or private—and you’re carrying out R&D activity, this service is essential. This includes:
- Start-ups receiving government innovation grants.
- SMEs with EU or Innovate UK project funding.
- Scale-ups involved in collaborative funded R&D efforts.
- Businesses receiving subsidies for sustainability or automation projects.
Understanding how R&D tax relief grants and R&D tax relief subsidies apply in these cases can significantly affect your tax outcome.
Why Work with My Tax Consultants?
Our team brings deep knowledge of UK tax policy, grant frameworks, and R&D eligibility rules. We offer tailored advice that reflects the true nature of your funding sources. From assessing project scope to filing precise claims, we work to help your business avoid missteps and recover the right level of support.
Contact Us
Unclear on how your grant or subsidy impacts your R&D tax relief? Talk to the professionals.
