One of the positive things I have taken from the challenges we are all facing during the current crisis is the pride I feel in the amount of incredible innovation that UK businesses are engaged in as part of the response to COVID-19.
On 20 April, HM Treasury launched a billion-pound support package for innovative firms impacted by Coronavirus. Whether companies are investing in new R&D projects or focused on just surviving in the current climate, this new package is aimed at ensuring Britain remains a global leader in innovation, now and in the future.
One of the complex areas we often support our clients with is the interaction between external funding for their R&D activities, and making sure they still access their full entitlement to R&D tax incentives. Whether that’s through R&D tax credits for SMEs, or the R&D Expenditure Credit (RDEC) regime typically accessed by large businesses. We’ve set out the key aspects of the new support package, and what companies should be considering in terms of the impact accessing this support could have on their R&D tax incentives.
The support package is split into two elements:
The Future Fund will be delivered in partnership with the British Business Bank and launched in May. The fund will provide UK-based companies with loans between £125,000 and £5m from the government, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the last five years, and we expect more details on eligibility to be released shortly.
