Support for innovation, research and development

If you are doing research and development (R&D) for a new process, product or service or improve an existing one, you may be eligible for tax credits. From April 2023 there are changes to how the research and development (R&D) tax credits work.

There are two categories of tax relief:

• SME R&D tax relief for organisations with under 500 staff and a turnover of under 100 million euros or a balance sheet total under 86 million euros
• R&D expenditure credit (RDEC) for large companies or SMEs that have been subcontracted to do R&D by a large company

To be eligible, the work has to be part of a project to make an advance in science or technology - not the arts, humanities or social sciences. It must also relate to your company's current trade or one you plan to launch based on the R&D results.

Before claiming SME R&D tax relief or RDEC you may now need to submit a claim notification form to HMRC. You will also need to submit detailed information before you claim.

Grants and funding

The government helps businesses benefit from the knowledge and expertise of other businesses and academic institutions. It also offers grants for innovation and R&D:

• Innovate UK is the UK’s national innovation agency that supports business-led innovation in all sectors, technologies and UK regions. They help companies access expertise and equipment, build the partnerships to grow faster, and fund the innovation work through grants or loans.
• SMART: SCOTLAND is a Scottish Enterprise grant that supports highly ambitious SME projects with technical and commercial feasibility studies.
• The R&D Grant programme previously provided by Scottish Enterprise is being transitioned to a new grant funding model to create jobs and a greener economy.
• The Highlands and Islands Enterprise research and funding scheme supports businesses undertaking research and development, even if the innovation is new only to your business.
• The Innovation Voucher Scheme is a Scottish Funding Council scheme, administered by Interface, that enables small and medium-sized businesses in Scotland to build relationships with higher education institutions to help them develop new products, services and processes.

Other government initiatives

If your idea could help address a specific problem faced by government or a public sector organisation, the Small Business Research Initiative (SBRI) offers a fully-funded development contract with a relevant public sector department.

Scotland's Innovation Centres offer advice and support to start-up businesses in sectors such as sensing, precision medicine, digital health and care, data, aquaculture, biotechnology and construction. Their aim is to help businesses large and small increase the pace of innovation.