Many UK R&D tax credit claimants also claim innovation grants for the same projects. One of the most common sources of those grants is the EU’s Horizon grants framework. Since Brexit, there has been uncertainty around the UK’s continued participation in the scheme. This article aims to clarify the situation.
Update on the UK’s participation
The UK will continue its participation in the Horizon Europe framework. That settlement was reached as part of the UK Withdrawal Agreement, which was agreed in December 2020. The UK and EU parliaments later ratified the agreement in January 2021.
All UK entities (businesses, universities, researches centres etc) can now make the relevant applications on the EU Commission website.
The UK will also be associated with the EURATOM Research and Training Programme, as well as fusion-related activities carried out under the European Joint Undertaking for ITER and the Development of Fusion Energy.
Limits to the UK’s participation
There may be some competitions in which UK entities are not allowed to participate. The EU secured a provision that allows for UK exemption for projects that affect EU “strategic assets, interests, autonomy or security”. However, this is unlikely to affect the majority of grants calls.
Additionally, applicants to the European Innovation Council Accelerator will be eligible for grants, but not eligible for the equity and loan options. That’s because equity and loans are subject to participation in the EU’s financial instrument framework, which the UK opted out of.
What is Horizon Europe?
Horizon Europe is the successor to the Horizon 2020 Grants Framework. It’s a €95billion research and innovation programme which supports science and technology programmes within the bloc. There are numerous sections to the framework, with the most relevant being the European Innovation Council for SMEs and the broader Global Challenges for larger consortia.
How has the UK benefited from Horizon Europe?
The UK has historically performed well within the Horizon grants framework. During Horizon 2020, despite Brexit-related uncertainty, the UK still secured over €5.9 billion in funding (13.5% of the total funding available). We were the second-biggest recipient after Germany.
How to apply to Horizon Europe
For larger business, academic institutions and startups entering into consortia, then the Horizon scheme itself is suitable. You can find information on the UK Gov website, including a list of national contact points to discuss your application.
For SME’s, the EIC is the best source of grants. The application is somewhat simpler as the EIC does not require applicants to join consortia or partnerships.
It’s also worth noting that receiving grants can also impact the value of your R&D tax credit. We recommend reading our guide on the subject and understanding if the grant you’re applying for counts as notified state aid or not.