Today’s Announcements
Going into this Budget, nerves across the business community were quite high, so the Chancellor was keen to double down on the growth message. The Chancellor reaffirmed multiple measures designed to strengthen the UK’s investment environment and support innovative businesses.
The 2025 Budget and recent UKRI announcements signal a deliberate shift in the UK’s innovation landscape, one which focuses on stability, targeted support and long-term growth.
While core innovation incentives remain largely unchanged, with UKRI committing £38.6bn to priority-led research, the government seems to be doubling down on measures that strengthen the UK’s talent pipeline, attract private capital and back high-potential sectors.
R&D Tax Relief: Advanced Assurance
Expectations were largely met. Businesses will be thankful for minimal structural change this year to the R&D tax relief scheme, especially considering the raft of changes introduced over the last few years. The Government wants to continue to “bed in” the merged scheme before considering further changes to how the scheme operates.
While on the face of it there was nothing significant to the R&D scheme, in the backing report we see following statement.
“The government will pilot a targeted advance assurance service from spring 2026, enabling small and medium-sized enterprises to gain clarity on key aspects of their R&D tax relief claims before submitting to HMRC. The government is also publishing a summary of responses to the advance clearance consultation.”
At this stage there is no detail on what this pilot will look like. We welcome the publishing of the summary of responses to see if this provides more clarity on the proposed changes.
There will also be legislation introduced on the treatment intra-group payments made in return for R&D (as well as Audio-Visual and Video Games) Expenditure Credits. This will come into effect from today.
Patent Box: No major policy shifts
If SPatent Box remains a mainstay for manufacturing, engineering, materials science, product- led tech and other companies with qualifying IP.
Given the government’s current drive to support growth and to maintain stability, no material changes to Patent Box structure or rates were expected, and there were no surprise changes.
Updated grants & industrial funding
On 24 November 2025, UKRI unveiled a major reshaping of public R&D funding, committing a total of £38.6 billion. These were allocated cross three clear funding “streams”.
- £8 billion is earmarked for R&D aligned with government and societal priorities: climate resilience, clean energy, health resilience, national security, infrastructure and other “Industrial Strategy”-aligned themes.
- £7 billion is designated to support “innovative company growth” — backing UK firms to scale, commercialise technologies, and become “industry titans of the future.”
- £14 billion continues to fund curiosity-driven, foundational research — the academic and long-term science base that underpins future breakthroughs.
Beyond the headline numbers, the announcement also confirmed other supportive measures likely of interest to R&D-active SMEs and scale-ups. These included additional funding through the global talent pipeline to support relocation of world-leading researchers to the UK and renewed rounds of other targeted funding schemes, such as funding for more Women Entrepreneurs.
This signals a shift of UK public funding landscape where support is no longer scattered broadly across many small-scale projects, but being refocused on high-potential sectors, commercialisation, and scaling of companies.
Corporate Tax & Capital Allowances
While R&D tax incentives themselves remain stable, the Chancellor also:
- confirmed no rise in the main Corporation Tax rate,
- extended full expensing and provided a 40% first year allowances rate. The main writing down allowances rates have fallen, and
- provided minor enhancements to creative-sector tax reliefs.
For capital-intensive innovators the extension of the full expensing is meaningful. For R&D capital intensive companies, the continuing access to Research & Development Capital Allowances should not be underestimated.
EMI, EIS and VCT
The Enterprise Management Incentive (EMI) scheme which remains a critical tool for high-growth SMEs, enabling tax-advantaged share options that help companies retain key people, has seen the asset cap increase from £30m to £120m and employee cap increase to 500 people.
For investment, the Government restated the long-term extension and benefits of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) by increasing the limits to £10m and £20m for Knowledge Intensive Companies (KICs). They also increased the lifetime investment limits and gross asset tests.
Together, these incentives reinforce the UK’s broader growth strategy: encouraging innovation, attracting private capital and supporting scaling firms without over-reliance on debt.
What this means for UK innovators
Looking at the Budget alongside UKRI’s recent funding shift, a clear theme emerges: the government is becoming more deliberate about backing specific sectors it believes will shape the UK’s economic future. That means more targeted funding, more structured support, and potentially a more selective approach to R&D oversight, especially as Advanced Assurance becomes more prominent and HMRC tightens its compliance framework.
If you’re working in fields like AI, quantum computing, engineering, life sciences or clean tech, this could be mean more reliable, structured support: new grant opportunities on one side and expanded capital routes on the other. But for innovators outside those priority areas, the pathway may feel less certain, competition might be tougher and support harder to secure.
The real test will be how this plays out over the coming months. The House of Lords has already warned that the UK faces a science and technology “growth emergency.” So, we must ask:
- Will these changes help more UK start-ups scale domestically rather than looking overseas?
- Will they unlock the late-stage capital for companies trying to grow at pace?
- Will early-stage and scale-up funding genuinely expand?
- Will the R&D incentives and compliance process become clearer and easier for businesses to navigate?