Scottish Investment Zones Subsidy Scheme: grant measure guidance
Source: gov.uk (2025-10-07)

Guidance for accountable bodies for Scottish Investment Zones wishing to award grant subsidies under the Scottish Investment Zones Subsidy Scheme.

1. Introduction

1.1. This document provides guidance to accountable bodies for Scottish Investment Zones wishing to award grant subsidies under the Scottish Investment Zones Subsidy Scheme (https://searchforuksubsidies.beis.gov.uk/scheme/?scheme=SC11411) (“the Scheme”).

1.2. The Scheme enables accountable bodies to subsidise activity under 4 investment categories: local infrastructure, research and innovation, skills, and business support.

1.3. This guidance explains the terms and eligibility conditions for the awarding of grant subsidies under each investment category.

1.4 Public authorities considering awarding a subsidy under the Scheme should familiarise themselves with the UK subsidy control regime: statutory guidance (https://www.gov.uk/government/publications/uk-subsidy-control-statutory-guidance).

1.5. Accountable bodies for Scottish Investment Zones that satisfy themselves that a grant subsidy award complies with the Scheme and this guidance are not required to conduct their own assessment of the award against the subsidy control principles.

1.6. Grant subsidies given under the Scheme must comply with:

1.6.1. the general conditions in paragraph 3, and

1.6.2 the conditions specified under each investment category.

1.7. The Scottish Investment Zone subsidy scheme and this guidance may be modified from time to time.

2. General definitions

2.1. In this guidance:

2.1.1. “The Act” means the Subsidy Control Act 2022.

2.1.2. “Eligible Activity” means the activities eligible for grant subsidy that deliver the objectives and outcomes of the Investment Zone programme, further detailed under each investment category.

2.1.3. “Beneficiary” means the enterprise receiving a grant subsidy under the Scheme.

2.1.4. “Eligible costs” means the eligible costs listed under each investment category.

2.1.5. “Enterprise” means the definition taken from section 7 of the Subsidy Control Act 2022.

2.1.6. “Intervention” means levers available under the different categories of grant funding, which will achieve specified outputs and outcomes.

2.1.7. “Local Infrastructure” means the infrastructure built, developed or restored at a local level to improve places.

2.1.8. “Pre-development costs” means activities in progress or completed in advance of physical works commencing and include activities such as site investigations, preparing cost estimates, progressing design work, obtaining planning permission, or negotiating land and/or building acquisitions.

2.1.9. “Public authority” means Regional Economic Partnership (or accountable body) and other public bodies awarding grant subsidies under the Scheme.

2.1.10. “Research and Innovation” means planned research or critical investigation aimed at the acquisition of new knowledge and skills for developing new or improved products, processes or services (or a combination thereof).

2.1.11. “Research and Knowledge Organisations” means an entity such as universities or research institutes, technology transfer agencies, innovation intermediaries, research-oriented physical or virtual collaborative entities, the primary goal of which is to conduct fundamental research, industrial research or experimental development.

2.1.12. “Skills” means sector-focused skills activity where the local labour market need, as identified by the Investment Zone, is not being met by existing programmes.

2.1.13. “the Scheme’’ means the Scottish Investment Zones Subsidy Scheme.

3. General conditions

3.1. Accountable bodies and relevant public authorities may award grant subsidies to any enterprise in order to deliver the objectives of their Investment Zone. Enterprises that are businesses will range from large companies to small companies.

3.2. Grant subsidies must only be for activity in Investment Zone areas under the 4 investment categories: skills, local infrastructure, research and innovation, and business support.

3.3. A public authority may not give a grant subsidy for activity that has started, except where:

3.3.1. the beneficiary has begun incurring or has incurred pre-development costs, but physical works and other eligible activity haven’t been legally committed to or commenced.

3.3.2. the public authority is of the view that activity would not be viable unless it starts before the subsidy is awarded and the public authority has provided written authorisation to the beneficiary for the activity to start before the subsidy is given.

3.4. Before giving a grant subsidy under the Scheme, a public authority must, as a minimum, obtain from a beneficiary the following information:

3.4.1. name and size of the enterprise, company registration number, registered company address.

3.4.2. description of the proposed activity, including its location (including which Investment Zone site and/or tax site), start and end dates, and a summary of the costs.

3.5. Open and fair competition should be the default means of awarding subsidies except in justified circumstances. Public authorities must use objective and transparent selection criteria that are available to potential recipients in advance of giving a grant subsidy and be subject to the public authority’s existing accountability frameworks. This includes consideration of potential distortive impacts on the market and mitigation measures.

3.6 A business case for the giving of the grant subsidy must have been approved by the public authority. This includes consideration of the need to ensure that the grant provides additionality and that the minimum amount of grant is used to achieve the desired outcomes.

4. Subsidy type and valuation

4.1. The maximum grant subsidy awardable to a single beneficiary over 3 years under each of the 4 subsidy categories is as follows:
- skills: £20 million
- local Infrastructure: £45 million
- research and innovation: £35 million
- business support: £25 million
5. Transparency

5.1. Public authorities must comply with the transparency requirements set out in Chapter 3 of Part 2 of the Act. Any subsidy awarded under the Scheme that exceeds the value of £100,000 must be uploaded to the subsidy database within 3 months of the legal commitment to award a grant subsidy. The relevant accountable body for the Investment Zone is responsible for ensuring that transparency requirements are met. The Scheme maintains its ongoing commitment to comply with Article 369 so checks will be undertaken to ensure subsidy awards are uploaded to the transparency database.

6. Cumulation

6.1. The maximum grant subsidy cumulating to a single beneficiary under each investment category is set out in paragraph 4.1. Subsidies awarded to a single beneficiary under multiple categories, or in multiple Investment Zones, do not cumulate.

6.2. Where a subsidy will or may exceed the maximum grant awardable to a single beneficiary over 3 years set out in paragraph 4.1 for the 4 investment categories, that subsidy will fall out of scope of this Scheme.

7. General prohibitions

7.1. Public authorities must comply with the general prohibitions set out in Article 367 of Part 2 of the UK-EU Trade and Co-operation Agreement and Chapter 5 of the subsidy control regime statutory guidance, including the relocation of activities prohibition in paragraph 5.22 of the Guidance and where relevant the exemption criteria set out at paragraph 5.31 of the Statutory Guidance.

7.2 The Scheme cannot be used to award grant subsidies where the specific policy objective of the subsidy (or one of its objectives) relates to energy or the environment, as set out in paragraphs 4.3-4.8 of the Statutory Guidance.

8. Misuse of subsidy

8.1. A public authority should ensure that any subsidy given under this Scheme is given subject to a condition allowing the public authority to recover the whole or part of the subsidy amount to the extent that the subsidy is used for a purpose other than the purpose for which it was given, and not for double funding, and to the extent that a beneficiary does not follow the rules of the Scheme thereby misusing the subsidy. A public authority must also include in legal agreements with beneficiaries an appropriate mechanism to recover subsidies where it becomes necessary to do so.

9. Investment categories

Local infrastructure

1. Introduction

1.1. Subsidies awarded under this category will support the delivery of specific local infrastructure improvements including local transport schemes, digital infrastructure schemes, unlocking development sites and bringing local assets into use for investment and employment.

2. Enterprise eligibility

2.1. Public authorities may give subsidies to beneficiaries investing in local infrastructure in Investment Zone areas.

3. Eligible activity

3.1. Eligible activity funded under this category is:
- subsidies that improve highway access for a particular business or businesses
- subsidies that improve active travel routes to areas of employment for a particular business or businesses
- subsidies for specific capital interventions that enable better join up of development sites with utilities and access to the grid, such that a particular business benefits
- subsidies needed for a business to develop necessary innovation infrastructure
- subsidies needed for a business to fund new or improved digital infrastructure capacity to improve connectivity and facilitate the adoption of new technologies
4. Eligible costs

4.1. A grant subsidy for local infrastructure can support expenditure associated with delivering an eligible activity.

4.2. Subsidies must only be given for costs incurred directly as a result of the activity, must be limited to costs that are strictly necessary for the activity, must be limited to the specified time period of the activity, and must not compensate for expenditure the beneficiary would have funded in the absence of any subsidy.

5. Subsidy thresholds and ratio

5.1. The maximum subsidy awardable to a single beneficiary over 3 years for eligible activity is £45 million.

5.2. Subsidy may be awarded at a ratio of up to 100% of the eligible costs of eligible activity.

6. Subsidy type

6.1. Subsidies will be provided in the form of grants.

Research and innovation

1. Introduction

1.1. Subsidies under this category will take the form of grants to support product and process innovation, bringing products to market, commercialisation, and improving translation and uptake.

2. Enterprise eligibility

2.1. Public authorities may give subsidies to beneficiaries investing in Research and Innovation activity in Investment Zone areas in the target sector(s) specific to each Investment Zone.

3. Eligible activity

3.1. Eligible activity funded under this category is:
- direct R&D grants to specific firms to support them to bring products to market or improve uptake
- subsidies for the purchase of capital equipment to support businesses’ R&D activity
- subsidies to support the development of spinout companies from research institutions
- subsidies to enable companies, researchers and academics in the Investment Zone to work with a Catapult on specific R&D activities
4. Eligible costs

4.1. A grant subsidy for research and innovation can support expenditure associated with delivering an eligible activity.

4.2. Subsidies must only be given for costs incurred directly as a result of the activity, must be limited to costs that are strictly necessary for the activity, must be limited to the specified time period of the activity, and must not compensate for expenditure the beneficiary would have funded in the absence of any subsidy.

5. Subsidy thresholds and ratio

5.1. The maximum subsidy awardable to a single beneficiary over 3 years for eligible activity is £35 million.

5.2. Subsidy may be awarded at a ratio of up to 100% of the eligible costs of eligible activity.

6. Subsidy type

6.1. Subsidies will be provided in the form of grants.

Skills

1. Introduction

1.1. Subsidies under this category will take the form of grant funding for specialist sectoral-focused skills activity where the local labour market need, as identified by the Investment Zone, is not being met by existing programmes.

1.2. Investment Zone skills activity/provision must relate specifically to the Investment Zone sector(s), take account of the local labour market, target existing skills gaps, facilitate access to high real-wage jobs for those of low and middle skill levels, and are needed beyond existing national and local skills provision, as per the co-development process and the proposals signed off by government.

2. Enterprise eligibility

2.1. Public authorities may give subsidies to beneficiaries investing in skills activity in Investment Zone areas in the target sector(s) specific to each Investment Zone.

3. Eligible activity

3.1. Eligible activity funded under this category is:
- subsidising employers to provide sector-specific skills
- subsidising companies to provide retraining to support people into high knowledge sectors
- providing localised apprenticeship incentives for employers linked to the sectoral focus of the Investment Zone
4. Eligible costs

4.1. A grant subsidy for skills can support expenditure associated with delivering an eligible activity.

4.2. Subsidies must only be given for costs incurred directly as a result of the activity, must be limited to costs that are strictly necessary for the activity, must be limited to the specified time period of the activity, and must not compensate for expenditure the beneficiary would have funded in the absence of any subsidy.

5. Subsidy thresholds and ratio

5.1. The maximum subsidy awardable to a single beneficiary over 3 years for eligible activity is £20 million.

5.2. Subsidy may be awarded at a ratio of up to 100% of the eligible costs of eligible activity.

6. Subsidy type

6.1. Subsidies will be provided in the form of grants.

Business support

1. Introduction

1.1. Subsidies under this category will fund sector-specific tailored support for businesses’ productivity and growth and business support that leverages local research strengths and facilities (for example, Catapults), and is additional and complementary to the national offer.

2. Enterprise eligibility

2.1. Public authorities may give subsidies to beneficiaries investing in business support activity in Investment Zone areas in the target sector(s) specific to each Investment Zone.

3. Eligible activity

3.1. Eligible activity funded under this category is:
- subsidies to provide seed funding to support the creation of angel/venture capital investor funds
- subsidies to support start-ups through the early stages of development and growth, including for account management, training, and access to workspace
- subsidies to support city regions to grow clusters, hosting international business events and conferences that support wider local growth sectors
4. Eligible costs

4.1. A grant subsidy for business support can support expenditure associated with delivering an eligible activity.

4.2. Subsidies must only be given for costs incurred directly as a result of the activity, must be limited to costs that are strictly necessary for the activity, must be limited to the specified time period of the activity, and must not compensate for expenditure the beneficiary would have funded in the absence of any subsidy.

5. Subsidy thresholds and ratio

5.1. The maximum subsidy awardable to a single beneficiary over 3 years for eligible activity is £25 million.

5.2. Subsidy may be awarded at a ratio of up to 100% of the eligible costs of eligible activity.

6. Subsidy type

6.1. Subsidies will be provided in the form of grants.