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Completed Your Q1? Unlock Your R&D Tax Credits 12 Months Ahead of Schedule

If you’ve finished your first quarter, you could unlock up to 80% of your end-of-year R&D Tax Credit up to 12 months earlier than usual.

If you’ve just completed the first quarter of your financial year, you’ve probably already made sizeable investments in developing new products or services or enhancing existing ones with exciting and innovative features. 

These investments may be eligible for R&D Tax Credits, allowing you to recoup a sizeable percentage of your expenditure which you can reinvest in future research and development. 

The challenge is you’ll have to wait a long time to receive your R&D Tax Credit – nine months until the end of your financial year and another three-plus months while HMRC processes your claim. 

Helpfully, there is a way to unlock your R&D Tax Credit much earlier – as soon as you’ve finished your first quarter, in fact. That is through GrantTree’s Advance Funding service.

What is Advance Funding?

Advance Funding allows ambitious startups and scaleups to access up to 80% of their R&D Tax Credits windfall up to 12 months earlier than usual. Eligible businesses can access their advance as soon as they’ve finished their first quarter, based on their Q1 expenditure. 

To give an example of Advance Funding in action, let’s say you invested £250,000 in qualifying R&D in Q1. When it comes time to claim R&D Tax Relief, this expenditure will generate a payable credit worth up to £83,375. However, you will only be able to access this credit when HMRC has processed your end-of-year corporation tax filing. 

With Advance Funding, you could access up to 80% of your credit – £66,700 in this example – almost immediately after you’ve finalised your first-quarter figures. 

Getting approval for Advance Funding is fast and easy. 

Once you’ve registered your interest in Advance Funding, GrantTree’s specialists will verify your eligibility for the R&D Tax Relief scheme and run some due diligence with our partners. 

As soon as the checks are complete, we’ll transfer the capital to your corporate bank account and you can start investing it right away. 

Use Advance Funding to Boost Your R&D Tax Payout

Accessing R&D Tax Credits months ahead of schedule can help you accelerate key purchases, bridge funding rounds, and negotiate more favourable terms with your investors. And the benefits don’t stop there.

By reinvesting your advance into additional R&D, you’ll also be able to claim a much larger cash credit at the end of your financial year, and a bigger advance after your second and third quarters.

Here’s an example of how reinvesting your advance can yield a larger cash credit. 

Reinvesting your Advance in Q2

Sticking with the figures above, let’s say you receive Advance Funding of £66,700 and that you add this money into your Q2 R&D budget of £250,000.

Before the advance, your Q2 investment of £250,000 would yield an end-of-year credit worth £83,375. With the advance, your Q2 investment of £316,000 would yield a credit of more than £105,000. That’s a 27% increase – as long as it’s all eligible R&D.

Reinvesting your Advance in Q3 and Q4

You don’t have to stop there. You can also take out an advance on the back of your Q2 and Q3 development expenditure. 

By reinvesting these advances in your Q3 and Q4 development work respectively, you can increase your year-end R&D Tax Credit windfall by nearly 25%. 

Here’s what this looks like.

Before 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

After 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

This is a best-case scenario, where the advance is provided the moment your quarter is finished. Realistically, however, you won’t be able to reinvest the money that quickly unless you’re lining up expenditure in anticipation of the funds.

You can also acquire an advance on your Q4 expenditure, which you reinvest into your development work at the start of your next financial year.

"GrantTree have been our funding advisor for a number of years across R&D tax credits and grants. They’ve always made the process as smooth as possible, and recently sourced a £190k loan that we could reinvest straight back into R&D rather than waiting for our next claim payout."
Julian Fisher Jisp
Julian Fisher
CEO, Jisp

Ready to discuss Advance Funding?

With Advance Funding, you can access a large proportion of your R&D Tax Credit as soon as you’ve finished your first quarter. If you’ve just finished your Q1 and are interested in unlocking your R&D Tax benefit up to a year ahead of schedule, just get in touch.