The correction, stated plainly first: under the merged scheme, receiving grant funding towards your R&D no longer reduces the R&D tax relief you can claim on the same expenditure. That's a genuine change, not a clarification of something that was always true, and it only applies to accounting periods beginning on or after 1 April 2024.
The old rule, for contrast
Under the old SME scheme, "subsidised" expenditure was capped
The old SME scheme had a specific restriction: R&D expenditure that was "subsidised" (which in practice caught most notified state aid and a good deal of grant funding) couldn't be claimed at the enhanced SME rate. A company that received a grant covering part of its R&D costs typically had that portion of the expenditure pushed into the far less generous old RDEC treatment instead, or excluded from the enhanced SME uplift entirely. This is the rule almost everything published online about "grants and R&D" is actually describing, and it's still correct for accounting periods governed by the old SME scheme.
The new rule
The merged scheme dropped the subsidised expenditure restriction entirely
gov.uk's own description of the reform states it directly: "In a further simplification, the rules relating to subsidised expenditure in the SME scheme were not carried forward into the new merged scheme, meaning that where a company receives a grant covering part of the costs of their R&D (for example), the amount of relief available will not be reduced" (gov.uk, "The Merged Scheme: R&D Expenditure Credit (RDEC)"). In practice: a company can receive grant funding covering part of its R&D costs and still claim relief on the full qualifying expenditure, grant-funded part included, without the reduction the old SME scheme used to impose.
Why this is worth being loud about: plenty of businesses, and some advisers working from habit, still frame grant funding as something that works against an R&D claim, or as a reason to structure around receiving one. For accounting periods under the merged scheme, that's backwards. A company sitting on a grant-funded R&D project it assumed would only give a reduced claim may well be under-claiming because of a rule that no longer exists.
The part that isn't retroactive
Your period start date decides which rule applies, not when you're claiming
The date that matters is when the accounting period began. A company whose accounting period began before that date is still assessed under the old rules for that specific period, whatever today's date is, and however long ago the period itself ended. Filing the claim now doesn't pull an earlier period into the new treatment. If you've got open or upcoming claims spanning both sides of that date, expect the grant-funding treatment to genuinely differ period by period, not to follow a single company-wide rule.
Decision helper
Alternatives and limitations
This page covers the grant-funding interaction only, not the rest of what determines your scheme. Use the scheme checker to confirm your accounting period is actually inside the merged scheme before relying on this. If the R&D itself was contracted out or partly carried out overseas, those are separate rules that can interact with a grant-funded project (see contracted-out R&D and overseas R&D costs). And this is general information, not advice on your specific claim: take the exact figures to an adviser.
