The Government announced today that it is pledging £750m of targeted support to who it describes are “the most R&D intensive small and medium size firms.” It comprises the following support:
- £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. This may well have the widest appeal to SMEs of all the measures announced.
- An extra £550 million will also be made available to increase support for existing Innovate UK customers
Innovate UK will also accelerate up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. This appears to be money that has already been committed although it has to be welcomed that payments are going to be accelerated.
In addition to the above packages, the Future Fund was announced. This is designed to ensure high-growth companies, i.e. startups, receive enough investment to remain viable during the coronavirus crisis. This will be in the form of convertible loans provided by the Treasury to startups which will convert into equity at a later date if not repaid. Any amounts provided by the Treasury will need to be matched by private investors. To qualify for the Future Fund, startups must be privately owned and have received at least £250,000 of investment in the last five years.
Please see details of the packages at the following link:
There isn’t a great deal of information about these measures at the moment and hopefully this will be released soon given payments are due to start being made by mid-May.
State Aid & R&D Tax credits
Funding from Innovate UK, and COVID-19 related support measures, is deemed as State Aid. Any research and development project for which State Aid is received is treated as subsidised and therefore not eligible for SME tax relief in respect of R&D. Care should be taken that the benefit of money received from this support package is not outweighed by the benefit of future R&D tax credit claims.
