Support for business research and development and innovation (R&D&I)

Business innovation is the exploitation of new ideas, whether these are new products, services or business processes.

Support from Government

The Government provides a comprehensive range of support for business research and development and innovation (RDI) including grants and tax relief, support for knowledge transfer and provision of advice 

See Solutions for Business Government Funded Business Support: A Guide for Business (PDF, 118 Kb) . Products particularly relevant to R&D and Innovation include:

Collaborative Research and Development
Designing Demand
Finance for Business
Smart (which was previously known as 'Grant for Research and Development')
High Growth Coaching
Knowledge Transfer Partnerships
Manufacturing Advisory Service
Networking for Innovation

The Solutions for Business portfolio is part of a wider package of measures that Government is delivering to support business growth.

Business Coaching for Growth

The Business Coaching for Growth programme (BCG), launched in January 2012, will provide high quality coaching for up to 10,000 SMEs a year. This is being rolled out across England from January 2012 and will be fully operational by March 2012. Targeted at both start ups and established businesses with the potential to achieve fast or high growth rates across all sectors, companies will be coached to develop and implement their strategies and overcome the challenges such as exploiting innovation, sales or raising finance. Participants will also be connected with:

• External finance – Business Angel Networks, Venture Capitalists
• Business Support Services – Trade (UK Trade and Investment); Innovation (Technology Strategy Board); Intellectual Property (Intellectual Property Office); Manufacturing (Manufacturing Advisory Service) as well as private sector delivered solutions
• Access to Premises – science parks, universities, business incubators.

The programme will be delivered by the Coaching for Growth Consortium. This includes Grant Thornton, Pera, Oxford Innovation, and Winning Pitch along with seven other delivery partners with excellent connections to local support providers right across England. Participating companies will only be expected to contribute towards costs, not pick up the whole bill. The amount of the contribution is determined by company size and the scale of the final growth programme. Further information is available on the Consortium’s interim BCG website http://www.businessgrowth.uk.com/ where SMEs can also register an interest.

Advice available via Business Link

Business Link provides a range of advice about Innovation, including the following titles:
Use innovation to grow your business ; Manage your research, design and development; Support networks and facilities for Innovation and R&D ; Manufacturing Innovation; Innovation, research and development grants; Find out if you can claim R&D tax credits ; Tax Reliefs and Allowances for R&D.

For the full listing of titles see the Businesslink - Create, innovate and protect - site map

Patent Box

Budget 2011 confirmed that a reduced 10 per cent rate of corporation tax for profits arising from patents is being introduced from 1 April 2013 – for more information see our entry on the Patent Box.

R&D tax credits

R&D tax credits are an incentive in the form of tax relief for companies of all sizes to raise their investment in R&D. The tax credits work by allowing companies to deduct qualifying expenditure on R&D activities when calculating their profit for tax purposes.  Alternatively, some companies with under 500 employees can claim cash back.

The Government intends to introduce an ‘above the line’ R&D tax credit, effective from April 2013, and will consult on details at Budget 2012. Under this change the R&D tax credit could be accounted for as a reduction in R&D spend – rather than just being reflected in the tax line of the company accounts. Any unused credit (i.e. if the company is loss making) would be payable to the company (rather than carried forward in losses to be offset once the company is profitable).

For the purposes of R&D tax credits, R&D can be defined as any project to resolve scientific or technological uncertainty aimed at achieving an advance in science or technology.  Advances include new or improved products, processes and services.

In the UK, the accounting definition of R&D is contained in the Statement of Accounting Practice (SSAP) 13 and for international companies, International Accounting Standard (IAS 38) both of which are based on the OECD 'Frascati' manual. This definition is modified for tax purposes, including R&D tax credits, by the guidelines on the meaning of R&D for tax purposes (2004) -  the ‘DTI Guidelines’.

Sources of Finance

A comprehensive and straight-forward introduction to sources of finance for business investment in innovation and how to access them is provided in The No Nonsense Guide to Finance for High Growth and Innovative Businesses (September 2010).

For those who prefer to talk with someone, mentoring for businesses with less than 250 employees so that they can understand the funding options available to them and how to access these more easily, is provided via the mentorsme.co.uk portal.  This new service was launched in July 2011 and gives access to a network of 10,000 mentors.

UK technology based businesses with high growth potential may be able to benefit from the  UK Innovation Investment Fund. This was launched in early 2010  and focuses on growing small businesses, start ups and spin outs in digital and life sciences, clean technology and advanced manufacturing. It operates as a Fund of Funds, making disbursements via specialist intermediaries. It does not provide funding direct to companies.

Substantial lending is available to UK corporates and universities for investment in R&D and Innovation.  Find out more about EIB.

Collaborative business/university research: Lambert Agreements

The need for model agreements to assist collaborations between universities and companies led to the development of Lambert Agreements, including model consortium agreements, a decision guide and guidance materials.

R&D and Intellectual Property

A variety of Intellectual Property Rights exists to help companies protect their inventions, ideas and designs. Details are provided at UK Intellectual Property Office.

Benchmark your innovation performance

International research has consistently demonstrated the positive correlation between the amount of investment in R&D and company performance measures such as sales growth and share price and shareholder return in the sectors where R&D is important.
 
Sustaining R&D and other related investment at the right levels enables these companies to maintain competitive advantage and to improve their chances of growth and survival in the increasingly competitive global market place.

Calculating the Value Added ratio (bought-in goods and services subtracted from sales) is a useful way of measuring the financial health of your business and can help you understand what the right level of R&D investment might be.  See advice provided by Business Link.

Contracts: Small Business Research Initiative (SBRI)

Under this initiative companies tender for work directed towards addressing specific research challenges identified by Government Departments. These challenges are advertised in the form of competitions. Click here for more information.

Contacts

Association of Independent Research and Technology Organisation (AIRTO) provides a useful link to a wide range of government bodies, research organisations and trade associations.

Business Link are a source of practical advice for businesses, providing helpful information to companies on various aspects of business, including available finance, grants and support schemes for R&D. 

The Design Council promote the vital role of design in research and innovation through campaigns which bring designers and managers together with consumers to deliver enhanced products and services.

EUREKA is a pan-European network for market-oriented, industrial R&D. Created as an intergovernmental Initiative, EUREKA aims to enhance European competitiveness through its support to businesses, research centres and universities who carry out pan-European projects to develop innovative products, processes and services.

The Framework Programme is the European Union's main instrument for the funding of Research & Development in Science, Engineering and Technology.

HM Revenue & Customs is the government department with lead responsibility for the administration of tax, including Corporation tax. They are also responsible for administering R&D tax credits.

The R&D Society is a UK based organisation formed to promote the better understanding of research and development in all its forms.

Solutions for Business are part of the Department for Business, Innovation and Skills' range of tailored business support. They are designed to meet different stages of your business's development and growth and are easy to access and use.

The Technology Strategy Board (TSB) stimulates technology innovation in industry in areas offering the greatest scope for boosting UK growth and productivity. Activities include grants for collaborative R&D and support for knowledge transfer.

UK IRC (UK Innovation Research Centre) is a collaborative initiative for cutting-edge research and knowledge exchange activities on how innovation can make businesses more competitive, improve public service delivery and help the UK meet the social, environmental and economic challenges it faces.

UK Intellectual Property Office is responsible for Intellectual Property (IP) in the UK. They provide a comprehensive range of information on patents, copyright, design and trademark policy and can advise on all aspects of Intellectual Property.

The UK Research Office (UKRO) is the UK's foremost information and advice service on European Union research and higher education. UKRO's mission is to promote effective UK participation in EU funded research, higher education and related activities.

UK Trade and Investment (UKTI) is the only investment agency covering the whole of the UK. It helps the world's companies to set up or expand business in the UK. Attracting R&D and high tech investment is key to UK Trade & Investment's strategy in bringing knowledge driven projects to the UK.

Contact BIS for the Innovation pages:

Innovation Investment Policy
Department for Business, Innovation and Skills
Orchard 2, floor 2
1 Victoria Street
London
SW1H 0ET
Email: Andrew.Culley@bis.gsi.gov.uk 

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