Boost R&D Tax Credit

Boost Your R&D Tax Credit 24% with R&D Advance Funding

GrantTree’s R&D Advance Funding service lets you accelerate development spending and access a cash credit worth up to 41% of your original investment budget. 

The R&D Tax Credits scheme is an excellent source of funding for growing businesses. It’s especially beneficial for pre-revenue companies, providing them with a cash credit worth 33p for every £1 they invest in development. 

However, as a form of corporate tax relief, you can only access R&D Tax Credits at the end of your financial year. This presents a real problem for companies that need funding sooner. 

Thankfully, there’s a solution: R&D Advance Funding

R&D Advance Funding is a service from GrantTree that lets you access up to 80% of your R&D Tax Credit as soon as you have finished your first financial quarter. That’s up to nine months before the end of your financial year and a whole 12 months early once you factor in HMRC’s processing time.

R&D Advance Funding is an excellent solution for high-growth, loss-making companies looking for funding. It gives them the flexibility to increase their R&D spending, extend their cash runway, and make critical investments without giving away equity. 

Moreover, companies that reinvest their advance in R&D can increase the size of their year-end R&D Tax Credit by almost 24%. Here’s how. 

Getting an R&D advance after your Q1

As mentioned, you can access your R&D Tax Credit as soon as you’ve finished your first financial quarter. 

Let’s look at how advancing the Q1 portion of your claim could benefit your business. 

As an example, let’s say you’ve budgeted £1,000,000 for R&D this year – £250,000 per quarter. Let’s also say, for simplicity’s sake, that all of that budget will be eligible for R&D Tax Credits.

Each quarter’s investments would generate an R&D Tax Credit worth £83,375 at the end of year. GrantTree can advance you up to 80% of this total – £66,700 – at the start of your second quarter. If you spend this on R&D, your new annual R&D budget would be £1,066,700. 

Assuming all this extra spending qualifies for R&D Tax Relief, you would receive an extra £22,244 in funding at the end of your financial year–a 7% increase. 

The financial rewards of advancing your R&D Tax Credit don’t stop there, though. 

You can also access an advance after your second and third fiscal quarters. This would allow you to greatly increase your R&D spending and acquire a far larger credit when it comes time to claim. 

Using your R&D advance to maximum effect

The table below shows what would happen if you took down an R&D advance after your first, second and third financial quarters and reinvested all three in further qualifying development work in the proceeding months. 

With Advance Funding

Q1 Q2 Q3 Q4 Total
R&D Spending
£250,000
£250,000
£250,000
£250,000
£1,000,000
R&D Tax Credit
£83,375
£83,375
£83,375
£83,375
£333,500

With Advance Funding

Q1 Q2 Q3 Q4 Total
R&D Spending
£250,000
£316,700
£334,496
£339,243
£1,240,439
Advance Re-Invested
-
£66,700
£84,496
£89,243
£240,439
R&D Tax Credit
£83,375
£105,619
£111,554
£113,138
£413,686

As you can see, using R&D advance funding would let you increase your research and development budget and your year-end R&D Tax Credit by 24%. 

To give you an even clearer picture of the benefits of advance funding, this graph shows how your development budget could grow with multiple rounds of R&D advance funding.

This is a best-case scenario, where the advance is provided the moment your quarter is finished. It usually takes a couple of weeks for your advance to come through.

Want to learn more about R&D advance funding?

GrantTree’s R&D Advance Funding service is a great route to funding for high-growth, highly-ambitious businesses that don’t want to sacrifice equity.

If you want to learn more about R&D Advance Funding or get the ball rolling on your advance, just get in touch. Our team would be happy to help you!