Notice

Annex D-1 - UK Space Agency Overhead Guidance and Policy

Updated 25 October 2023

We understand that organisations calculate overheads in different ways.

This section offers 4 options for overhead costs:

1. No overheads. You can select this option if you are not incurring or claiming grant for your overheads
2. The 20% of labour costs option allows you to claim 20% of your project pay costs as overhead. This includes both direct and indirect overhead. Selecting this option allows us to review a successful grant application much faster as no further documentation is needed from you
3. The calculate overheads option asks you to complete calculations for claiming direct and indirect overheads. Any value claimed under this method will need to be reviewed by our project finance team if your application is successful. This is so we can assess the appropriateness of the overhead value you are claiming
4. Where an organisation qualifies and applies for Full Economic Cost (FEC) recovery, your application should be supported by the latest Transparent Approach to Costing (TRAC) submission or equivalent financials to support the requested amount

Full overhead recovery or full absorption costing is not eligible.

Please note that once the overhead is calculated and approved it cannot be exceeded at any time throughout the project life.

For option 3 you must complete the overhead calculation spreadsheet and return with your grant submission. The spreadsheet has 2 sections to fill:

• Indirect (administration) overheads
• Direct overheads

Once each section is completed the ‘Total overheads’ will calculate your total amount, for review by the UK Space Agency.

1. Indirect (administration) overhead

Selecting the indirect (administration) overheads link will take you to a template you will need to complete to calculate these costs.

We class indirect overheads as those costs associated with back office functions (such as finance, HR, administration staff) whose primary function is to support the running of a business enterprise. Typically these costs are not directly related to a particular product or service production.

Indirect overhead costs are eligible for inclusion if they are incurred directly as a result of undertaking the project. They must be additional, which means over and above your business as usual costs. Requests for higher then 20% overheads that cannot clearly demonstrate the additional resource specifically due to the grant being undertaken will be rejected.

Where you have already identified specific ‘indirect’ individuals working directly on the project, these should have been captured in the labour costs (section) together with their attributable overhead.

We have provided cost categories in the template. The table below provides our definition for each category.

Cost category	Definition
Board and senior management	The proportion of salary costs (including employer’s NI) of the board and senior management of the company. This should be where they are engaged in strategic or administrative tasks. Do not include those working directly on the project or who are customer facing or operational.
Administrative staff	The salary costs (including employer’s NI) of main administrative staff, such as receptionists and central administration. Do not include administrative staff employed to support sales, marketing, account management and profit generating departments.
Human resources staff	The salary costs (including employer’s NI) of human resource staff.
Employed estates staff	The salary costs (including employer’s NI) of employed cleaning, maintenance, security and other estates staff.
Finance department staff	The salary costs (including employer’s NI) of main finance department staff, such as payroll, accounts payable and receivable. Do not include staff employed to support sales, marketing or account management activities.
Administrative support temporary/agency staff costs	This should include fees paid for the provision of temporary staff in administration or support services as listed above. Do not include any staff that are operational, such as marketing, sales, engineering, quality assurance, research and development and supply chain.
General office IT services	Include general IT services used across the whole organisation. Do not include IT costs where they relate purely to non-eligible staff or manufacturing, production or fee earning activities.
General postage	Include postage and courier expenses for general administration needs. Do not include product delivery or any postage costs incurred through promotion, sales, marketing customer relationship or accounts management.
Office supplies, printing and stationery costs	General office stationery and supplies such as paper, business cards, corporate stationery, office equipment for support/admin staff listed above. Do not include specific costs associated with sales, marketing, product delivery, product literature or reports.
Security and safety costs	Include costs associated with site and staff safety and security including signage and health and safety costs.
Building maintenance: administration office facilities only	Include general repair and maintenance costs of administration facilities. Do not include repair and maintenance of manufacturing/production facilities and exceptional items such as new works or extensions which are not eligible for inclusion in this section.
Building rental: administration office facilities only	Where office space is leased include the rental costs. Do not include rental costs relating to manufacturing/production facilities and the cost of any deposits or penalties.
Contracted site services: administration office facilities only	Costs of contracted services relating to administration facilities such as cleaning of offices. Do not include contracted service costs related to manufacturing/production facilities.
Site property taxes: administration offices facilities only	Property taxes and charges relating to office space. Do not include manufacturing/production facility property taxes and charges.
Utilities: administration office facilities only	Electricity, gas, water, waste disposal, telecoms costs relating to administration office facilities.

The following is a step by step guide to help you fill in the relevant details to make your costs claim for indirect overhead.

1.1 Column A

Starting with your latest set of audited accounts please input your details against the relevant cost category in column A. If you are a new company or this information is unavailable, please use internal management accounts or forecast data.

Note that for the administration support staff costs section, the costs included here must be based upon PAYE (gross salary, NI, company pension contribution, life insurance). They should exclude discretionary package costs such as bonuses, awards, PRP and dividends. In addition please exclude any members working directly on the project who are customer facing or those engaged in operational/production areas.

1.2 Column B

In this column you should detail the proportion of the costs outlined in column A that represent core administration activity. You should follow the definitions and eligibility criteria outlined in the cost categories table above. You can use a percentage.

1.3 Column C

In column C please state what percentage of these costs you would assess as being additional and directly attributable administration activity to the project you are undertaking. By additional we mean over and above business as usual and specific to the Grant.

1.4 Column D

Based upon the details you’ve given in the previous columns, column D will automatically calculate the costs you’ve stated as being attributable to this project.

1.5 Column E

In column E you will need to provide some description of the cost constituents.

Once you have filled in this data you will see a percentage calculation (column F). This calculates what you consider as being eligible indirect overhead costs for your project (D) as a proportion of the annual audited figures (A). To save you time we use this calculated percentage and apply it to the remainder cost categories you have completed.

Any administration costs that are ineligible in this section but which directly relate to the project (for example based on invoices), should be claimed as direct costs within other sections of the finance form.

Completion of the indirect overheads template will calculate an annual total which will be proportioned for the length of time you are working on the project. You will see a per annum, per month and a per project cost. The per project costs will form your total indirect overheads as a monetary value.

Once you have filled out your indirect overheads information choose the ‘return to the overheads section’ to take you back to the main overheads section. Here you will see a summary of your indirect overhead.

2. Direct overhead

Selecting the direct overheads link will take you to a template you’ll need to complete to calculate these costs.

We understand that in undertaking a project you may incur associated costs with those staff working directly on the project. We refer to these as direct overheads. Typical costs in this area could include direct staff provision of laptops (non-capital only), desks, office (such as occupancy, facilities and utilities) and IT infrastructure and systems. This section is provided in free format for you to list out such costs.

Direct overhead costs must be directly attributable to the project you are undertaking and should not represent a full recovery methodology inclusive of redundant, spare capacity time or cost.

You should detail the costs and include a description of each item together with the methodology or basis of apportionment used. This should include the calculations that support the claimable costs. This will help us to validate these costs if your project is successful. If your costs have been subject to an independent audit verification we may ask you to provide this report to support our financial eligibility reviews.

Please note that costs associated with laboratories or workshops should be included within the other costs section of the application form.

Once you have completed the direct overhead you should select ‘return to the overheads section’. You will return to the main overhead section where you will see a summary of your overhead claim for both direct and indirect overheads.