Grants no longer stand in the way of R&D relief.

For accounting periods beginning on or after 1 April 2024, HMRC says there is no restriction on claiming for subsidised costs under the merged scheme or enhanced R&D intensive support. That means a grant-funded project is not excluded just because of the grant. The project must still meet the R&D definition and the costs must be qualifying costs. We check the grant terms alongside your claim.

Yes, they could. HMRC's SME guidance says a company could not claim SME relief on a project subsidised in some other way, such as by a grant, but could claim on the part that was not subsidised. Large companies had to use the R&D expenditure credit. If your claim covers an earlier period, the grant position needs to be looked at carefully.

The old subsidised expenditure provision, section 1138 of the Corporation Tax Act 2009, was omitted for accounting periods beginning on or after 1 April 2024, by Finance Act 2024 and a related statutory instrument. For those periods the merged scheme and ERIS apply without that restriction. For earlier periods the old rules can still matter, particularly in late claims, amendments and enquiries.

For periods beginning before 1 April 2024, HMRC's guidance says that if an SME had received notified state aid, it could only claim the allowable costs under the R&D expenditure credit scheme. Other grants or support that did not cover all the costs could allow a claim under the SME scheme for the uncovered part. This is why historic claims need the grant paperwork.

Yes. HMRC's SME guidance says a company could not claim if it had received R&D relief, vaccines research relief or both, totalling more than 7.5 million euros for the project. This is part of the old SME scheme for earlier periods. It does not appear in the merged scheme guidance, which we read for periods starting from 1 April 2024.

Yes. Even where the claim is not reduced, a clear note of what the grant paid for, which periods it covers and which costs it relates to helps you explain the project funding if HMRC asks questions. We record the grant alongside the project and cost schedules, so the story told in the claim matches the story told to the funder.

For periods under the merged scheme and ERIS, HMRC has removed the restriction on subsidised costs, but the rules for qualifying costs still apply. Costs also have to be paid, and you cannot claim both ERIS and merged RDEC on the same costs. The grant provider may have its own conditions on how you report spend, so we recommend reading your grant agreement.

We do not give an opinion on the tax treatment of grants on this page, because that depends on the type of grant and its terms. What we can say is that, for periods from 1 April 2024, the R&D claim itself is not reduced simply because of a subsidy. We check how the grant is recorded in your accounts so the claim and the computations are consistent.

The treatment depends on your accounting period. For periods beginning on or after 1 April 2024, the merged scheme gives a 20% taxable expenditure credit, and ERIS gives an 86% extra deduction and a 14.5% payable credit to eligible loss-makers. Before that date, the SME and RDEC schemes applied and grants could restrict the SME claim. Dates decide which rulebook we use.

Send the grant offer letters, the funding agreements, the schedule of costs the grant covers and your claim reports to the funder. These show what each grant paid for and over which periods. We use them to match grant spend against your project records, and to check that nothing in the claim contradicts what you reported to the grant body.