Notice

Annex A – Grant funding guidance

Updated 3 January 2024

This notice was withdrawn on 24 October 2024

The call is now closed.

1. Organisation Eligibility  

There are a series of requirements for eligibility to receive grant funding: 

• Grant Recipients must demonstrate the ability to effectively manage a project 
• Grant Recipients must have a UK bank account and all grant payments will be made in UK sterling (as per grant funding agreement) 
• all project members must have in place and provide evidence of appropriate anti-bribery and anti-corruption policies 
• all project members must provide evidence of a process for declaring and managing conflicts of interest 
• all project members must be able to provide evidence that they are GDPR compliant 
• projects cannot work in areas that are in active conflict and any travel to overseas must comply with FCDO recommendations 
• projects must pass due diligence checks on company viability (financial standing assessment, governance, conflicts of interest, technical expertise) 
• formal teaming, or equivalent agreements between project partners must be in place within 60 days of grant signature 
• projects must comply with the rules stated in this guidance document

2. Guidelines for Projects 

2.1 Cost Recovery 

The funds from Grant funding are on a cost recovery basis only. Grants are solely intended to cover the cost of delivering the agreed activity or goal.  Any surplus funds not spent will be lost to the project unless there are alternative arrangements agreed.  

Grantees cannot receive any funding from other grants/contracts to undertake the same activities. 

Grant funding cannot be rolled over between financial years without explicit consent from UK Space Agency. 

3. Finance Policy 

All partners must use a separate, project-specific, bank account or project accounting code for project funds to enable a clear audit trail. 

3.1 Invoices 

The UK Space Agency will only pay on actuals therefore we expect invoices may differ from forecasts. Should actual costs incurred be greater than the value of the milestone value, these costs will be borne by the Grant Recipient, unless the additional expenditure has been agreed with the UK Space Agency ahead of the costs being incurred and a Grant Change Notice (GCN) executed. 

3.2 Staff Costs 

Staff costs must be calculated on a cost recovery basis only and broken down by pay costs and overheads separately.  

3.3 Pay Costs 

Pay costs are calculated based on your PAYE records. They should include gross salary, employer National Insurance (NI) contributions and employer pension contributions. Pay costs must not include:  

• any profit margins 
• commercial charge-out rates 
• allowances for bonuses and benefits in kind 
• business development 
• travel and subsistence  

These pay rates will be subject to checks during the negotiation stage by internal or external teams to ensure that day rates reflect actual costs. High payroll costs will be challenged and evidence (such as pay slips, etc.) must be provided to justify that the rate is on a cost recovery basis only.  

When making grant claims against labour costs, actual costs claimed must be supported with timesheets of those individuals who have worked on the project. 

In the budget breakdown, you are asked to provide a pay cost per day. Using actual gross monthly payroll costs, please assume 260 working days in the year, less annual leave and public holiday entitlements.  

4. Overheads 

We understand that organisations calculate overheads in different ways. 

This section offers 3 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 labour 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. 

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 two 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. 

4.1 Indirect (administration) overhead 

Selecting the indirect (administration) overheads link will take you to a template you’ll 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. 

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. 

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. 

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. 

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. 

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. 

4.2 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. 

5. VAT Rules 

Grant funding is outside the scope of VAT so you cannot charge output VAT on top of your submitted costs.  If you incur non-recoverable input VAT costs, you can pass this on to UK Space Agency. 

6. Ineligible Expenditure 

The following costs are ineligible:  

• payment that supports for lobbying or activity intended to influence or attempt to influence Parliament, government or political parties, or attempting to influence the awarding or renewal of contracts and grants, or attempting to influence legislative or regulatory action
• using grant funding to petition for additional funding
• input VAT reclaimable by the Grant Recipient from HMRC
• payments for activities of a political or exclusively religious nature
• goods or services that the Grant Recipient has a statutory duty to provide
• payments reimbursed or to be reimbursed by other public or private sector grants  
• contributions in kind (ie, a contribution in goods or services, as opposed to money)
• depreciation, amortisation or impairment of fixed assets owned by the Grant Recipient 
• the acquisition or improvement of fixed assets by the Grant Recipient (unless the grant is explicitly for capital use – this will be stipulated in the Grant Offer Letter)
• interest payments (including service charge payments for finance leases);  
• gifts to individuals
• entertaining (entertaining for this purpose means anything that would be a taxable benefit to the person being entertained, according to current UK tax regulations)  
• statutory fines, criminal fines or penalties; or liabilities incurred before the issue of this funding agreement unless agreed in writing by the UK Space Agency
• employee paid benefits and bonuses
• alcohol

7. Travel and subsistence 

The following outlines the guidelines for travel and subsistence costs. Value for money must always be considered. If for any reason the set limits cannot be adhered to (eg, to accommodate a reasonable adjustment), you must seek prior written approval from the UK Space Agency. No claims for alcohol will be accepted.  

The UK Space Agency reserves the right to not settle claims which have breached these guidelines. All expenditure must be supported by actual, itemised receipts. 

Limits: 

• accommodation: £140 per night 
• breakfast: £5 
• lunch: £5 
• dinner: £15 

 Travel: 

• all travel claimed must be using Economy rates.  
• tolls, ferry costs, parking and congestion charge: receipted costs for ferries, and tolls bridges and roads unavoidably incurred during your business journey may be claimed. Reasonable parking charges may be claimed. Receipted congestion charges unavoidably incurred on your business journey may be claimed.  

8. Grant Funding Agreement 

The grant funding agreement template is included as a separate document. Applicants must sign up to the terms as set out in the grant funding agreement.  

No material changes to the terms will be considered. Minor changes may be considered if an applicant can demonstrate that agreeing to the provision within the Grant Funding Agreement would result in the applicant breaching its statutory or regulatory obligations. Grant applicants wishing to propose changes should not make changes directly to templates, but engage with the call lead and advice will be provided.  

9. Grant Recipient Code of Conduct 

All organisations in receipt of grant funding must abide by the UK government Code of Conduct for Grant Recipients.

10. Annual Audit of Project Costs  

All projects will be subject to an external annual audit to ensure that costs claimed from the grant funding have been expensed on agreed project related expenditure and comply to UK Space Agency grant funding policies (eg, match funding). The auditor will be appointed by the UK Space Agency. All subcontractors and partners must provide access to project relevant expenditure. Therefore, Grant Recipients must maintain, and be able to provide upon request, any supporting evidenced as deemed necessary, such as: 

• timesheets (prime and, where applicable, partners) 
• staff costs (contractors) 
• all receipts (including T&S) 
• all partner and subcontractor invoices 
• breakdown of overhead costs 
• breakdown of capital usage (eg, licence, data costs etc) 

The UK Space Agency reserves the right to conduct ad-hoc audits throughout the life of the project. 

11. Due diligence 

The UK Space Agency will carry out due diligence on grant applications as required using internal and, where necessary, external subject matter experts. The scope and degree of due diligence will be determined by the value, nature and complexity of the grant scheme. All applications will be subject to basic checks such as credit reports and Companies House checks.   

Additional pre-award due diligence may include, but is not limited to: 

• technical assessment of the proposed project: including technical viability and sustainability 
• financial assessment: organisation financial standing/health, assessment of project costs, aid intensity values and match funding contributions 
• economic impact / VFM assessment   
• commercial: viability and / or commercial sustainability of the proposed solution, market position, demand and / or interest in technology, terms of the grant funding agreement; and/or 
• programmatic: alignment to aims and objectives of the programme, programme plan which demonstrates the project can be delivered within the funding period and the critical path, risks and issues, details on project partners and/or subcontractors

Post-award due diligence may include, but if not limited to: 

• technical assessment of milestone deliverables against acceptance criteria to allow milestone payments to be released
• financial: assessment of expenditure for each milestone payment and reporting on planned costs, follow up review of financial standing/health if it is a multi-year project 
• commercial: change management including any variations to time, cost, scope, or GFA terms; review of milestone deliverables as required
• programmatic: project progress and impacts of any delays, risk assessment and mitigation activity; and 
• end of project review: has the technical and economic value been realised? Lessons learned and continuous improvement
• UK Space Agency commissioned and funded financial audit of Grant Recipient, and if applicable project partner, costs

Grant Applicants who opt to work with project partners, companies involved in delivery of the project under a flow down agreement rather than a subcontractor, will assume all responsibility for partner due diligence.  

Applicants will need to demonstrate they have carried out a sufficient level of due diligence with regard to their proposed project partners and subcontractors. Applicants will need to demonstrate they have carried out minimum checks at proposal stage, which may require further scrutiny if the proposal is to be funded.  

To meet this requirement, applicants can provide evidence of due diligence carried out supported by the resulting information or submit a partner reasonable assurance statement. The evidence should be consistent with the checks that we would conduct on our Grant Recipients, for examples, financial standing, technical ability and scrutiny of the breakdown of costs. Any costs associated with project partner due diligence is considered a bidding cost and is to be borne by the applicant.  

Applicants must provide evidence that they, and project partners have in place of appropriate anti-bribery and anti-corruption internal policies, and a process for declaring and managing conflicts of interest. 

12. Appendix 1 – Subsidy Control   

12.1 Subsidy control (and State aid where relevant)  

The UK Space Agency supports UK based businesses to invest in research, development, and innovation. The support we provide is consistent with the UK’s international obligations and commitments to Subsidy Control. These include:  

• WTO rules  
• the EU-UK Trade and Cooperation Agreement (TCA), (see EU-UK TCA summary and BEIS (Dept. for Business, Energy & Industrial Strategy) guidance)  
• in certain circumstances (eg, under the Northern Ireland Protocol) EU State aid regulations may also be applied  
• other bilateral UK FTAs (Free Trade Agreements) where relevant  
• Subsidy Control Act 2022.  

12.2 What is a subsidy?  

For the purposes of UK international commitments, a subsidy is a measure which:  

1. is given by a public authority. This can be at any level; central, devolved, regional or local government or a public body
2. makes a contribution (this could be a financial or an in-kind contribution) to an enterprise, conferring an economic advantage that is not available on market terms. Examples of a contribution are grants, loans at below market rate, or a loan guarantee at below market rate or allowing a company to use publicly owned office space rent free. An enterprise is anyone who puts goods or services on a market. An enterprise could be a government department or a charity if they are acting commercially
3. affects international trade. This can be trade with any World Trade Organisation member or, more specifically, between the UK and a country with whom it has a Free Trade Agreement. For example, if the subsidy is going towards a good which is traded between the UK and the EU this could affect trade between the EU and the UK. It is not necessary to consider whether the subsidy could harm trade, just whether there could be some sort of effect. Subsidies to very local companies or a small tourist attraction are unlikely to be a problem as this is unlikely to affect international trade

The BEIS Subsidy Control regime (or where relevant EU State aid regulations) are designed to prevent unfair advantages and distortion of trade: Complying with the UK’s international obligations on subsidy control .

More information on the principles of awarding subsidies can be found in the BEIS guidance .

12.3 Subsidy Control Categories and Intervention Thresholds   

This competition provides funding that is not classed by the UK Space Agency as a subsidy by not being deemed a subsidy in accordance with Section 2 of the Subsidy Control Act 2022.  You should still seek independent legal advice on what this means for you, before applying.   

Further information about the UK Subsidy Control requirements can be found within the Subsidy Control Act 2022  and the subsequent guidance. ‘No subsidy’ status is only granted to organisations which declare that they will not use the funding:   

• in any way which gives them selective economic or commercial advantage   
• in any way which would determine the funding as a subsidy as defined by the Subsidy Control Act 2022 or the EU-UK Trade Cooperation Agreement   

It is the responsibility of the lead organisation to make sure all collaborators in the project remain compliant with these requirements.   

It is important to note that it is the activity that an organisation is engaged in as part of the project and not its intentions, that define whether any support provided could be considered a subsidy.   

Applicants can apply for funding for up to 100% of eligible project costs.   

13. Disclaimer  

This guidance is not a substitute for taking independent legal advice on your eligibility status, before applying for funding. Every applicant is responsible for securing their own independent legal advice to ensure they are lawfully eligible.   

Please note the UK Space Agency is unable to award organisations that are considered to be ailing and insolvent companies. We will conduct financial viability and eligibility tests to confirm this is not the case following the application stage.  

If you see an error in this guidance, email Commercial@ukspaceagency.gov.uk