Costs guidance for Knowledge Transfer Partnerships - Innovate UK

Guidance for knowledge bases applying to a knowledge transfer partnership (KTP) competition. As part of your application we will ask for all of your costs.

It is the responsibility of the knowledge base to ensure that this information is supplied along with indications of additional business contributions, which should also be entered on the application. Incomplete or inaccurate submissions will be withdrawn from the competition.

Calculating your costs

The total eligible costs for a KTP project depend on 4 parameters:

  • duration
  • the nature of the work to be undertaken
  • geographical location of the business partner or the project
  • costs of the knowledge base
  • if you are a virtual business
  • where the associate will work

Once you have established what your project is trying to achieve you’ll need to set out the tasks and stages in a workplan. This will allow you to understand which individual costs you can claim.

You must link your costs to the workplan.

Your project must include the costs for:

  • employing the associate
  • the knowledge base supervisor
  • any laboratory or office space used by the associate
  • additional associate support

The costs of the knowledge base are calculated according to formulas. There is a maximum cost for the associate salary which Innovate UK will not exceed. Other costs that have standard amounts may be exceeded if appropriately explained and justified within the application from.

Business partner’s costs

The business partner must cover their share of the project costs and along with other costs such as for supervising the associate and supporting the delivery of the project.

The business partner will also be required to support additional costs incurred through hybrid working such as home office equipment and software licences.

Virtual businesses must also cover the additional costs of running the KTP within the virtual business environment.

Additional costs for virtual businesses must be included on the application form in the ‘additional business costs estimates’ section:

  • meeting rooms
  • associate travel
  • office equipment
  • business software licences required for home working

Equipment for home working must satisfy the requirements of the knowledge base.

Budget management

The KTP programme will establish a local management committee (LMC) for your partnership, which will control the costs according to the grant offer letter.

Cost categories

You must calculate the costs of your project in whole months.

You must not:

  • charge the business partner any project costs that have not been included in your application.
  • reduce the costs to the business partner after KTP has approved the grant

Associate employment

From 26 January 2023, the maximum costs you can claim for employing the associate are £55,000 per 12 months. This includes costs for:

  • associate salary
  • national insurance
  • sick pay
  • annual leave
  • pension
  • redundancy
  • pay rises
  • retention, completion or other bonuses

Within the application you must explain the rationale for the budget requested. This must be based on evidence that the associate salary, and other costs, are appropriate for the industry or business in which the KTP will take place. Justifications relying solely on pay grades within the knowledge base or qualifications are not allowed.

If the business partner’s premises where most of the project work will be undertaken is within 16 miles of Charing Cross, London, you can include an extra London weighting of £3,000 per 12 months. This brings the total to £58,000 per 12 months.

Projects with virtual businesses cannot claim London weighting.

The knowledge base and business partner are responsible for any salary and additional employment costs that exceed these maximum amounts.

Maternity, paternity, adoption and parental leave

At the end of the grant period we will reimburse costs incurred by the knowledge base to cover any additional parental leave costs, including statutory maternity, paternity and adoption pay for staff.

Innovate UK’s contribution will be limited to the funding level (%) stated in the grant offer letter. The business partner is also expected to contribute towards these costs.

This aligns with section 8.3 of the UKRI full economic cost (FEC) grants standard terms and conditions.

Associate development

This supports the associate’s personal and professional development, providing:

  • additional developmental training that is specifically required for the project
  • training that helps the all-round development of the associate

The maximum associate development costs are £2,000 per 12 months. There are no exceptions to this maximum. The business partner is solely responsible for associate development costs that exceed this amount.

During the project the associate can use up to £700 of this on fees for a higher degree.

Travel and subsistence

For projects with virtual businesses, the business must pay all associate travel costs and include a budget for this in the ‘additional business costs estimates’ section of the application form.

For non-virtual businesses, travel and subsistence can be claimed for:

  • the knowledge base supervisor and knowledge base lead to attend monthly project management meeting and local management committee meetings
  • associate travel in relation to the delivery of the project as listed in the workplan

The business must also list its own travel and subsistence in the ‘additional business cost estimates’ section of the application form.

The standard travel and subsistence amount is £1,250 per 12 months, you can exceed this amount. You must justify all travel and subsistence costs in the application.

The cost of standard class peak rail tickets may be used when preparing travel and subsistence budgets. Your request will be approved or rejected by the KTP programme manager.

The travel and subsistence budget may also be used to support associate travel to training courses, conferences and trade shows approved by the Local Management Committee. Attendance fees must be met from the associate’s development budget or funded by the business partner. As a general guide no more than 2 conferences or trade shows will be supported per project, and must be included in the work plan.

The business partner must fully support any costs over the standard amount, for visits to client sites, overseas partners, or more than 2 conferences or trade shows included in the workplan.

You must take into account the environmental impact of your travel and be prepared to justify your choices. In order of preference you should consider:

  • walking and cycling
  • public transport
  • vehicles, including pool, hire and private cars
  • taxis
  • flying

Special arrangements for virtual businesses

Where a virtual business wishes to participate in KTP, the business must agree to cover the following additional requirements and costs.

Monthly project management meetings and LMCs must be held face to face at a location of the businesses choosing, and at their expense. These meetings must not be held at the knowledge base except in exceptional circumstances. The location of these meetings must be identified within the application and academic travel costs will be based on this.

Projects with virtual businesses may only claim for academic travel and substance. All associate travel will need to be paid for by the business partner. The business will need to include an allowance for associate travel within the ‘additional business costs estimate’ section on the application form.

If these figures are not included, it will be assumed that there is no budget available, and applications withdrawn from the competition.

Consumables (materials)

This only covers consumable items that are essential to carry out and complete the project. You can include the associate’s personal computer but not capital items that the business partner will use after the project is completed. With the exception of the personal computer, consumables are unlikely to exist or will be significantly transformed, after their use.

Items must not:

  • have already been purchased
  • have been included in other costs categories
  • be purchased from the business partner

Standard consumable costs are £2,000 per 12 months. You can exceed this but you must justify your request in the application form. Where high specification computers are required, the business must contribute to their cost. Your request will be approved or rejected by the KTP programme manager.

KTP does not support the costs of more than 1 personal computing device, commercial software licences, IT hardware including servers, physical storage units and tablet computers, mobile phones and contracts (unless specifically required for the safety of an associate), commercial cloud computing and online data storage services or equipment that is likely be used by the business partner after the project has completed.

In your justification, make clear which stage of your work plan each cost relates to. We encourage the business partner to help with any costs over the standard amount.

Other costs

These costs help develop and support KTP offices. If you want to claim for this, you must contact the KTP programme manager before you submit your application.

Knowledge base supervisor

The calculation of these costs varies for FEC and non-FEC projects.

This is the cost of the knowledge base employee who will give the associate academic supervision in the partnership.

The knowledge base supervisor must spend a minimum of half a day a week supporting the project. In rare cases the partners may need the knowledge base supervisor to provide more support but you must justify your request in the application form. Your request will be approved or rejected by the KTP programme manager.

We will not fund the supervision and support given to the associate by the business partner. These costs must be met by the business partner.

Associate estates cost

The calculation of these costs varies for FEC and non-FEC projects.

This includes the use of existing facilities and anything chargeable within the knowledge base.

Normally this will be zero as the associate is located at the business partner’s premises.

When using FEC, the knowledge base partner can request up to £10,000 extra for each project where the work plan demonstrates that the associate needs to spend significant time using the knowledge base’s facilities, including laboratory or office space. The associate is expected to spend the majority of their time in the business so extended period of work within the knowledge base are discouraged.

This category includes the use of specialist facilities and equipment that are chargeable (often by the day or hour) within the knowledge base, such as wind tunnels or electron microscopy.

You must explain why this budget is needed and your request will be approved or rejected by the KTP programme manager. There are no exceptions to this maximum.

We encourage the business partner to help with any costs over the standard amount.

Additional associate support

The calculation of these costs varies for FEC and non-FEC projects.

These are the costs for managing the associate, such as computing, personnel admin, learning resources and secretariat support to the LMC.

Project costs for FEC and non-FEC

There are 2 costing methodologies used by knowledge bases:

  • FEC (full economic costing method) used by higher education institutions
  • non-FEC (standard costing method) used by further education colleges, research and technology organisations (RTOs) and catapults.

Below are the standard costs for a project that lasts 12 months. You must calculate the figures for your project on a pro rata basis:

  • associate employment more than 16 miles away from Charing Cross, London – £55,000
  • associate employment within 16 miles of Charing Cross, London – £58,000
  • associate development – £2,000
  • travel and subsistence – £1,250
  • consumables – £2,000
  • associate estates cost – varies for FEC and non-FEC
  • knowledge base supervisor – varies for FEC and non-FEC
  • additional associate support – varies for FEC and non-FEC

Project costs for FEC

The principle behind FEC funding is that knowledge bases need to indicate the full economic cost of a project.

As a knowledge base using FEC, you’ll have a breakdown of your costs readily available because the UK government requires you to calculate them as part of TRAC (the transparent approach to costing). These costs will have been audited and approved.

Providing your FEC certificate for KTP

You must provide a current certificate when you apply to a KTP competition. A valid FEC certificate is required covering the date of the funders panel for this competition, listed in the competition guidance.

If your certificate will not be valid on this date, a valid FEC certification must be emailed to support@iuk.ukri.org a minimum of 10 days before the funders panel date.

Your certificate must:

  • confirm that your proposed KTP finances only include costs that are authorised to be recovered and that have been audited
  • list those costs in the certificate, with clear subheadings
  • have the certificate signed by your finance manager or an appropriately authorised member of the finance staff
  • confirm you will charge your business partner in full for its contribution to any project expenditure, and that the sums charged match your application
  • submit the certificate with every new application, as KTP does not keep a copy of your certificate
  • make the information available to your KT adviser

The project assessors will be able to view your FEC certificate (also known as an FEC letter) and must be satisfied that only these audited and approved costs are included in your project’s budget.

Your certificate will include these indirect costs:

  • vice chancellor and pro vice chancellor’s office
  • health and safety office
  • internal audit
  • registrar’s office
  • legal costs
  • library
  • IT services
  • development office
  • human resources
  • corporate communications
  • strategic planning and change
  • academic office (postgraduate research activity)
  • international office (postgraduate research activity)
  • research and economic development support services
  • treasurer’s department
  • interest payable
  • treasury charges
  • department indirect costs
  • cost of capital adjustment

Estate costs will include these costs:

  • buildings depreciation
  • equipment depreciation
  • insurance
  • infrastructure adjustment
  • utility costs
  • building maintenance
  • garden and grounds
  • laboratory technicians
  • departmental space costs
  • other chargeable costs for use of equipment or facilities

Calculating FEC-specific costs

Knowledge base supervisor

Your knowledge base supervisors’ costs will vary depending on their current salary and the overheads levied by the knowledge base. KTP will support these costs for 0.1 full time equivalent (half a day per week or one day per fortnight). For example, in the table below, the knowledge base supervisor costs of £80,000 (salary plus overheads) are multiplied by 0.1 giving the figure of £8,000.

Additional associate support

Additional associate support costs include indirect costs and the costs of providing the LMC secretariat. For example, in the table below, £36,000 of costs have been calculated on the KTP FEC certificate and charged at 50% to the project (£18,000).

Standard FEC costs for one associate for 12 months, located at the business’s premises. In this example, an associate salary of £45,000 has been deemed appropriate for the type of business

All figures in £ Eligible costs SME project: Innovate UK grant at 67% SME project: SME contribution 33% Large business project: Innovate UK grant at 50% Large business project: large business contribution at 50%
Contribution to associate employment costs* 45,000 30,150 14,850 22,500 22,500
Associate development 2,000 1,340 660 1,000 1,000
Travel and subsistence* 1,250 838 413 625 625
Equipment, consumables, and other costs 2,000 1,340 660 1,000 1,000
Knowledge base supervisor 8,000 for example 5,360 2,640 4,000 4,000
Estate costs 0 0 0 0 0
Additional associate support 18,000 for example 12,060 5,940 9,000 9,000
Grant payable or business contribution 51,088 25,163 38,125 38,125

The Innovate UK contribution for fEC projects are:

  • 75% of project costs for not-for-profit businesses of any size
  • 67% of project costs for micro, small and medium-sized businesses
  • 50% of project costs for large businesses and public sector organisations

Businesses will need to fund the remaining cost of the project.

* Projects with virtual businesses may:

  • not claim London weighting
  • only claim for academic travel and substance
  • may not vire travel and substance to another budget

Project costs for non-FEC

For knowledge bases that do not use the full economic costing methodology, a fixed percentage is available to cover project costs. Check the costs carefully to make sure your overheads are met.

To calculate the overheads of the knowledge base partner, using the appropriate Innovate UK grant contribution column (SME or large business) add together the grant costs of associate employment costs and academic and secretarial support. Overheads are 46% of this figure.

You can calculate the eligible costs for your project on a pro rata basis using the following table as a starting point. Academic and secretarial support is a fixed rate of £15,000 per year.

Standard non-FEC costs for one associate for 12 months, located at the business’s premises. In this example, associate employment costs of £45,000 has been deemed appropriate for the type of business.

All figures in £ Eligible costs SME project: Innovate UK grant at 60% SME project: SME contribution at 40% Large business project: Innovate UK grant at 50% Large business project: large business contribution at 50%
Associate employment costs* 45,000 27,000 18,000 22,500 22,500
Academic and secretarial support 15,000 9,000 6,000 7,500 7,500
Associate development 2,000 1,200 800 1,000 1,000
Travel and subsistence* 1,250 750 500 625 625
Equipment, consumables and other costs 2,000 1,200 800 1,000 1,000
Sub total 65,250 39,150 26,100 32,625 32,625
Overheads of the knowledge base partner and direct staff costs, including knowledge base supervisor 46% of Innovate UK contribution for associate employment and academic supervision costs 16,560 13,800
Grant payable or business contribution 55,710 26,100 46,425 32,625

The Innovate UK contribution for non-FEC projects are:

  • 70% of project costs for not-for-profit businesses of any size
  • 60% of project costs for micro, small and medium-sized businesses
  • 50% of project costs for large businesses and public sector organisations

Businesses will need to fund the remaining cost of the project.

* Projects with virtual businesses may:

  • not claim London weighting
  • only claim for academic travel and substance
  • not vire travel and substance to another budget

Updates to costs guidance for knowledge transfer partnerships

This guidance was published on 29 September 2020 and last updated on 1 February 2023.

1 February 2023

Costs update and introduction of public sector.

6 October 2020

We have clarified that the associate employment costs only include their salary.

6 October 2020

We have corrected the wording for associate employment costs to make clear the knowledge base is also responsible for any costs over the maximum. We have also removed an incorrect line that said the consumables costs calculations are different for FEC and non-FEC.

29 September 2020

First published.

Last updated: 2 January 2024

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