September 28th, 2026 at 02:56 pm
By Ronak shah, Nordstone | Last updated: September 2026
Innovate UK’s Smart Grants are paused, so app startups now rely on a mix of routes: targeted Innovate UK competitions for deep-tech or AI-led projects, R&D tax credits for technical risk, SEIS and EIS to make equity raising easier, and regional grants for local support. Each suits a different stage, and most can be combined.
TL;DR• Innovate UK grants: Smart Grants have been paused since January 2025, so look to targeted competitions and pilots such as Growth Catalyst (£25,000 to £50,000, now closed). • R&D tax credits: the merged scheme rewards qualifying technical work at 20% (RDEC) or up to about 27p per £1 for loss-making, R&D-intensive companies (ERIS). • SEIS/EIS: investors get 50% (SEIS) or 30% (EIS) income tax relief; EIS annual limits doubled to £10 million from 6 April 2026. • Regional grants: growth hubs, Scottish Enterprise, Business Wales and Invest Northern Ireland offer smaller, faster awards and advice. • How they interact: you can usually layer them, but never claim R&D relief on costs a grant has already paid for. • How to apply: register on the Innovation Funding Service, prove genuine innovation and need for funding, and start early. |
How can UK startups fund an app build?
There is no single grant for building an app. Instead, UK founders stack four kinds of support. Competitive grants, mainly from Innovate UK, pay for innovative projects. R&D tax relief gives money back on qualifying technical work. SEIS and EIS make it easier to raise equity from private investors. Regional schemes fill the gaps with smaller awards, loans and free advice.
The right mix depends on how novel your product is. A conventional consumer app is unlikely to win a competitive grant but may still attract SEIS or EIS investors. A product that solves a hard technical problem, for example a new machine-learning approach, has a stronger case for grants and R&D relief. The table below compares the routes at a glance.
| Route | What you get | Best suited to | Key catch |
| Innovate UK competitions | Grant funding for defined projects, often 100% of costs in early-stage pilots | Genuinely innovative, technology-led projects | Competitive; timing and themes change |
| R&D tax credits | RDEC at 20%, or ERIS payable credit for loss-makers | Any company doing qualifying R&D, including grant-free ones | Claimed after spending; needs HMRC-standard evidence |
| SEIS | Investors receive 50% income tax relief; company can raise up to £250,000 | Companies under three years old with fewer than 25 employees | Strict gross assets and age tests |
| EIS | Investors receive 30% income tax relief; company can raise up to £10 million a year | Post-seed startups raising larger rounds | Investor-side risk rules; advance assurance advised |
| Regional schemes | Small grants, loans, mentoring, matched support | Founders wanting local, faster funding | Budgets and eligibility vary by area |
Sources for the table: UKRI/Innovate UK guidance, GOV.UK R&D reliefs, HMRC Venture Capital Schemes Manual.
Innovate UK grants
Innovate UK is the UK’s national innovation agency and part of UK Research and Innovation (UKRI). Its best-known open-sector scheme, Smart Grants, funded UK businesses developing new products, services or processes with strong economic potential. According to UKRI’s Smart Grants funding guidance, Innovate UK paused Smart Grants from January 2025 to develop more tailored support, and the page now points founders to the agency’s new strategic direction and current opportunities.
What Smart Grants funded, and what has replaced them
While open, Smart Grants supported single-company or collaborative projects, with later rounds listing awards from about £100,000 up to £2 million . Eligibility required a completely new product, service or process, or a brand-new use for an existing one. Businesses that did not meet that bar were directed to other innovation support. Because the scheme is paused, treat any website listing it as “active” with caution and check the official Innovation Funding Service instead.
Innovate UK has since run targeted pilots and competitions. The Growth Catalyst Early Stage: New Innovators pilot, listed on UKRI’s opportunities page, offered UK micro and small businesses between £25,000 and £50,000, with 100% of project costs funded, over three to six months. It had a £10 million pot, focused on five critical technologies including artificial intelligence and machine learning, and closed on 6 August 2025. In spring 2026, Innovate UK also opened a competition for a share of up to £3 million for frontier AI and machine-learning feasibility studies, which closed on 29 April 2026.
Grants under these schemes are often awarded as Minimal Financial Assistance, which caps public support at £315,000 to any one enterprise over a rolling three-year period, according to the competition overview on the Innovation Funding Service. Successful applicants also gain access to Innovate UK Business Growth, which provides tailored, fully funded support. Founders who are unsuccessful can still use that service.
Our take: for app startups, the practical lesson is to look for competitions built around a technology theme, not a generic “app” bracket. If your product depends on original AI, data or connectivity work, frame the bid around that innovation. See our guide to AI app development for how we scope technically risky builds. R&D tax credits
Since 1 April 2024, most companies claim under a single merged scheme. It offers an above-the-line credit called RDEC at 20% of qualifying expenditure. Loss-making companies whose R&D spending is at least 30% of total expenditure can instead use the Enterprise Research and Development Intensive Support (ERIS) route, which combines an 86% additional deduction with a 14.5% payable credit and is worth up to roughly 27p for every £1 spent. HMRC’s R&D tax relief guidance on GOV.UK sets out the definition of qualifying R&D.
For app builders, qualifying work generally means resolving genuine scientific or technological uncertainty, not routine feature development. Software staff costs, subcontractors and cloud or data costs used directly in the R&D can count. Read our full guide to R&D tax credits for app development for worked examples and evidence tips. SEIS and EIS for investors
SEIS and EIS do not put money in your account directly. Instead, they give the people who invest in you generous tax relief, which makes an early round far easier to close. Under the Seed Enterprise Investment Scheme, investors receive 50% income tax relief on up to £200,000 a year. A company can raise up to £250,000 in total, must have fewer than 25 employees, gross assets of no more than £350,000 and be under three years old, per the HMRC Venture Capital Schemes Manual .
The Enterprise Investment Scheme suits larger rounds. Investors receive 30% income tax relief. From 6 April 2026, following the Autumn Budget 2025, the annual company limit doubled from £5 million to £10 million (£20 million for knowledge-intensive companies), the lifetime limit rose from £12 million to £24 million (£40 million for knowledge-intensive companies), and the gross assets test rose to £30 million before and £35 million after investment. SEIS limits were unchanged, and the schemes are extended to 2035. Venture Capital Trust relief, by contrast, fell from 30% to 20% for investments from that date.
Regional and sector grants
Beyond Innovate UK, several bodies fund or support early-stage tech firms. Local growth hubs in England give free advice and can point you to open regional funds. Scottish Enterprise, Business Wales and Invest Northern Ireland run their own programmes for businesses in those nations. The British Business Bank backs the government-supported Start Up Loans scheme, which offers personal loans and mentoring to new founders
Sector routes matter too. Health, climate, creative and financial technology projects often qualify for themed competitions run by Innovate UK, NIHR or other funders, and university spin-outs may access knowledge-transfer funding. Because regional budgets open and close frequently, check the official page for each body rather than relying on a third-party list. Local awards are often smaller, but faster to win, and they count towards the Minimal Financial Assistance ceiling where that applies.
How grants, credits and equity interact
The three main routes are complementary, provided you keep them separate in your accounts. The core rule is that you cannot be paid twice for the same cost. If a grant funds a piece of development, that expenditure generally cannot also support an R&D tax relief claim, and the rules differ between RDEC and ERIS. Split your project into grant-funded and self-funded work streams, record staff time against each, and give your R&D adviser the grant offer letter.
Grants and EIS or SEIS can normally sit side by side, but public support counts towards the “risk finance” limits that cap how much a company can raise under the venture capital schemes, so total the amounts before you plan a round. Grants that are awarded as Minimal Financial Assistance also count towards the £315,000 three-year ceiling. Finally, a grant can strengthen an investor pitch, because it shows independent assessors backed your innovation.
How to apply (and common mistakes)
Start on the Innovation Funding Service, where every Innovate UK competition publishes its scope, dates and scoring criteria. Register early, because you will need a Companies House registration, financial details and, in many competitions, evidence that you cannot fund the project without public money. Read the applicant briefing, use any suitability checker, and write each answer to the scoring criteria, not to your own headings.
Common mistakes are consistent. Founders describe a product rather than an innovation, and assessors mark down anything that looks like routine development. Others fail to show why public funding is needed, submit costs that do not match the grant request when a competition requires 100% funding, or start work before the grant offer letter is approved. Weak market evidence, a vague delivery plan and last-minute submissions also sink strong ideas. Allow several weeks, ask a colleague to review against the criteria, and reapply with improvements if you narrowly miss, as some competitions permit one resubmission.
Frequently asked questions
Can I get a grant to build an app in the UK?
What is an Innovate UK Smart Grant?
How much funding can an app startup get?
Can I use a grant and R&D tax credits together?
What's the difference between a grant and R&D relief?
What are SEIS and EIS?
Do I need to match-fund a grant?
How hard is it to win an Innovate UK grant?
Structure your build for funding
The way you scope and document your app can decide whether you qualify for grants, R&D relief and SEIS or EIS. Nordstone plans builds so that innovative work is clearly separated, well evidenced and ready for funders and investors to review. If you want to work out which routes fit your product, get in touch with our team and we will talk you through it.
