Innovation Grants in the UK: An Overview

Innovate UK runs several ongoing and periodic programmes that businesses can apply to:

• Smart Grants — Quarterly competitions open to UK businesses developing disruptive innovations. Grants range from £25,000 for feasibility studies to £2 million for late-stage development. SMEs can receive up to 70% of eligible project costs; larger companies receive up to 50%.
• Knowledge Transfer Partnerships (KTP) — Fund a graduate or postgraduate to work on an innovation project within your business for one to three years, supervised jointly by your team and a university. Businesses contribute around one third of costs, with Innovate UK funding the rest. KTPs are particularly effective for embedding technical expertise.
• Innovate UK EDGE — An intensive support programme matching high-potential businesses with experienced innovation and commercialisation specialists. Not a cash grant, but provides access to expertise worth tens of thousands of pounds.
• Catapult network — Nine Catapult centres across the UK (covering areas such as connected places, digital health, manufacturing, and offshore renewable energy) provide access to research facilities, expertise, and networks at subsidised rates.

The UK formally associated to Horizon Europe in January 2024, giving UK researchers and businesses full access to EU's framework programme for research and innovation. The UK's association to Horizon runs alongside Innovate UK's own international programmes including Eureka Globalstars and bilateral programmes with countries such as Canada, Israel, and South Korea.

Horizon Europe offers much larger grants than national programmes, with some projects exceeding €10 million. However, applications are highly competitive and require collaboration with partners in other Horizon member states. UK businesses new to Horizon Europe should seek support from their regional European Enterprise Network (EEN) contact, which provides free advice on finding partners and preparing applications.

The UK's participation in Horizon Europe is funded through the Horizon Europe Guarantee, which protects UK applicants if the UK's financial contributions are not aligned with UK success rates. This provides additional protection for UK organisations applying to Horizon.

Although not a grant, the R&D Expenditure Credit (RDEC) and the reformed SME R&D relief scheme (merged into a single scheme from April 2024 for most businesses) allow companies to claim a tax credit or enhanced deduction for qualifying R&D expenditure. This is separate from and complementary to any grants received.

Under the merged scheme, SMEs doing intensively R&D-focused work can claim an enhanced credit rate of 27% on qualifying R&D costs. This can offset corporation tax or, in some cases, generate a payable tax credit for loss-making companies. HMRC administers the scheme and has published detailed guidance on qualifying activities and costs.

Important note: if you receive a grant for an R&D project, the grant income may reduce the qualifying expenditure on which you can claim R&D tax relief. Get advice from an accountant or R&D tax specialist before applying for both simultaneously, to ensure you maximise the combined benefit.

Applying for Innovate UK grants requires a structured approach. Key steps include:

• Register on the Innovate UK Funding Service — All Innovate UK applications are submitted through this portal. Create an account and familiarise yourself with the system before a competition opens.
• Monitor open competitions — Sign up to Innovate UK's newsletter or check the funding service regularly. Competitions open and close on set dates, and many have short application windows.
• Read the competition briefing carefully — Each competition has specific scope, eligibility, and assessment criteria. Applications that fall outside scope are disqualified regardless of quality.
• Write a strong application narrative — Applications are assessed by independent expert reviewers. Your narrative must clearly explain the innovation, the market opportunity, the technical approach, the team's capability, and the project plan.
• Get peer review before submitting — Ask trusted advisers, mentors, or Growth Hub advisers to review your application before submission. A fresh perspective often identifies weaknesses you have missed.