The UK Government recognises that Innovation is a key driver for economic growth and has a number of ways of helping businesses through various national government departments and agencies. This blog is intended to provide an overview and links to further information – based on an event arranged by BIS in Birmingham on 16th January as part of a national series of events to raise awareness of these opportunities for business, particularly SMEs.
HM Revenue and Customs has two principle means of stimulating R&D and Innovation:
R&D Tax Relief (since 2002) is a Corporation Tax (CT) relief that may reduce a company or organisation’s tax bill. Full details are available on the HMRC website and a webinar is also available to explain these tax credits. Key points include:
- Claimed via normal Corporation Tax returns
- Rate is fairly complex is currently increasing as government is pushing R&D investment
- R&D basically defined as advances in S&T that solves uncertainties (overall knowledge, not just company knowledge)
- Includes improvements in process or product
- Can include expenditure that directly contributes to R&D (as defined), including staff, consumables, subcontracts and externally provided workers
- If R&D is subsidised by, eg TSB, rules change
- Some recent changes including removal of some lower limits, so might be worth looking again
- Evidence should be held and produced if asked, but a narative about R&D helps
- Most claims upheld and some help can be given by HMRC to submit first claims.
The Patent Box is a new form of HMRC support from 1 April 2013 to build on the benefits of R&D Tax Credits by encouraging commercialisation of R&D and make innovative high-tech companies more competitive. Part of wider reforms to R&D tax regime. The Patent Box provides incentive to companies to retain and commercialise patents and develop products in the UK, thus investing and creating jobs. Basically the Patent Box allows a 10% (or slightly less if pay Small company rate) Corporation Tax rate on profits attributed to approved types of patents (not US) – profits can be made anywhere. This could include profits on a whole product, even if patent only applies to a small part.
Customer Relations Managers of large companies have been trained in this new scheme, but those new to it can obtain help directly from HMRC. A webinar designed for SMEs is available which provides a basic overview and introduction to R&D tax credits and the Patent Box, and explains who is eligible to claim, how to make a claim and where to get further help and advice.
The Technology Strategy Board (TSB) is the national innovation agency of BIS. Its key words are business-led and innovation. Its goal is to stimulate growth, and it currently supports 6000+ businesses.
TSB has a range of schemes, seeking to offer ‘something for everybody with a good, innovative idea’. When seeking any type of support, however, the five key areas in TSB’s strategy should be considered carefully – all questions on application forms will relate to this strategy. About £350m/ year is invested. A new Delivery Plan is expected in April, which will indicate intended investments for year ahead. Broadly, areas of focus are summarised in this diagramme.
TSB has been criticised for being too focused on large companies, but SME support has rapidly increased since TSB was established. In 2009 50% of support was to large companies – in 2011 60% was to SMEs (with 20-25% universities throughout).
Of the support schemes available, those most relevant to SMEs are:
- SMART – no partner is required. TSB works in ‘response mode’ here, the scheme is always open, so a company only needs an innovative idea. Applications receive a fast turnaroud – around 30 days possible. They receive about 120 applications/ month, so it is competitive. The types of things typically suported are Proof of market, Proof of Concept (60% intervention rate), Development of prototype (45% intervention rate for SMEs). Unsuccessful bids do receive improved feedback now compared to the past, and one resubmission is allowed.
- Biomedical Catalyst Fund – this thematic, joint academic-business is a current competition in a key strategic area. Note in this case the definition includes Medical Technology. The fund looks to support Feasibility, Early Stage and Late Stage development.
- SBRI – aims to enhance possibility of a UK company winning public contract by 100% funding development of innovative solutions to tenders by the public sector – and the company keeps the Intellectual Property and can commercialise it. SBRI runs through targeted competitions – about 30 per year.
- Collaborative R&D – bigger grants for joint university-business R&D, in the range £25k-£1m. A recent change is that TSB now funds each partner at their eligible rate, not at an overall 50% limit.
- Innovation Vouchers – £5k to qualifying businesses (SMEs) to ‘have a conversation’ about innovative idea with a university or similar. The aim is to encourage SMEs and start-ups, to start a NEW relationship. Calls are launced against a series of rolling themes. Any bid in the scope of the theme is put into a lottery – with about 100 winners per theme.
- KTPs – have 3 elements – Business to do Innovation, University generator of knowledge and Associate as the channel from one to other, by working at the business, but with 0.5 day/ week of academic input.
As well as the above funding routes, TSB has a remit to develop the Innovation Ecosystem nationally. Busineses are encouraged to engage with the following:
- KTNs: themetic networks that inform members of funding, gather views to influence strategy and policy, plus encourage partnership. There are already about 50K members of KTNs across 16 themes. Individual businesses are often members of several, which helps to make connections between sectors.
- Catapult Centres – link up communities in few key strategic areas. Funding provides core competency (people and equipment) with bidding to build on the platform. 7 centres at various stages of development. SME engagement will be key, eg for supply chain working.
The Intellectual Property Office (IPO) knows it has a job to do, because a recent survey showed that 96% of UK businesses don’t understand the value of their Intellectual Property (IP), only 11% knew that disclosure of invention before filing invalidates it for patenting and only 4% of UK businesses have an IP policy. Ways to protect IP include patents, trade marks, registerd designs, copyright (including marketing leaflets), confidentiality agreements and more. The IPO can help with all of these and costs about half the cost of using a patent attorney (though latter may be more thorough in complex cases). For details of available help, see the IPO website.
The Design Council supports businesses to Innovate through design rather than R&D. This can include support for developing brands, packaging, product, process etc. The design Council can help businesses to explore their needs and consider different solutions, thinking of the route cause of a need for a design rethink, not just looking at the symptoms. Further details can be found the Design Council website.
Pam Waddell, Director of Birmingham Science City