Aiming to be a global hub for innovation by 2035, the UK is supporting businesses that have the ambition to develop breakthrough new products and grow in the market.
Budget messaging and related policy announcements have reinforced the focus on providing the conditions for innovative firms to move beyond the start-up phase and remain in the UK as they scale.
To increase the opportunities available to companies, significant investment is going into artificial intelligence (AI), quantum technologies, and semiconductors, among other sectors. If you’re planning to set up and grow your tech company in the UK, we discuss the latest support measures that are available and how we can help:
| Category | Latest support measures for UK tech companies |
|---|---|
| Location-based zones for tech company setup | |
| Tech grants and innovation funding | |
| Tax support and research incentives | |
| Investment and equity incentives | |
| Talent and visa incentives |
Location-based zones for tech company setup
While London continues to be a prime location for UK tech companies, the government has also introduced specific Investment Zones, Freeports and AI Growth Zones that can provide a strong ecosystem for growth:
Investment zones
One option worth considering is the UK’s Investment Zones programme. Investment Zones are being developed with local partners, often linked to universities and innovation clusters, and can include designated Investment Zone tax sites where specific tax reliefs apply.
If your company locates within a designated Investment Zone tax site, you may be able to benefit from targeted tax incentives. These include relief on business rates, Stamp Duty Land Tax (SDLT) relief on qualifying commercial property, enhanced capital allowances on plant and machinery as well as zero-rate employer national insurance contributions on new employee earnings up to £25,000 for up to three years.
Beyond tax relief, these zones typically receive long-term government funding to support innovation infrastructure, research partnerships and skills development. This ecosystem can be particularly relevant for tech companies seeking to collaborate with universities, scale new products or build research and development (R&D) teams.
Freeports
Freeports are another UK location-based initiative designed to stimulate investment, trade and regional growth. They are centred around ports or airports and combine customs advantages at approved Freeport customs sites with tax incentives that apply in designated Freeport tax sites.
If you operate in a Freeport tax site, you may be able to access reliefs such as business rates relief, SDLT relief, enhanced capital allowances and employer national insurance contributions relief. These are subject to conditions and time limits.
From a practical standpoint, Freeports can simplify cross-border movement of goods through a Freeport customs special procedure at authorised customs sites. Goods can be brought in for storage or processing with duty and import value added tax (VAT) suspended until they enter the UK domestic market. The suspended charges typically do not become due if the goods are re-exported.
AI Growth Zones
The UK government has also begun developing AI Growth Zones as part of its broader strategy to expand the country’s AI and advanced computing capacity. These zones are intended to accelerate the development of AI-enabled data centres and the infrastructure required to support large-scale computing workloads.
Locations being explored or announced include parts of Scotland, South Wales, North Wales, the North East of England and Oxfordshire. A key feature of these zones is the ability to support very large power requirements, typically targeting capacity of around 500 megawatts (MW) or more.
If your company relies on high-performance computing, machine learning infrastructure or large-scale data processing, being located in or near one of these zones could be advantageous. While eligibility and incentives vary by location and are still developing, the direction is to create places where compute-heavy AI businesses can scale with fewer infrastructure bottlenecks.
Tech grants and innovation funding
Alongside location-based incentives, the UK also offers a range of grants and innovation funding to support tech companies at different stages of growth. Many of these programmes are administered through organisations such as Innovate UK and the British Business Bank.
Innovate UK Contracts for Innovation
A programme you may explore is the Innovate UK’s Contracts for Innovation, previously known as the Small Business Research Initiative (SBRI). Run on a competition-by-competition basis, this scheme allows government departments and public bodies to contract tech companies to develop solutions to specific challenges.
If successful, your company could receive full funding to design, test or prototype innovative technologies that address public-sector needs. Importantly, you may retain ownership of the intellectual property (IP) during the project. The Contracts for Innovation can be particularly attractive if you’re keen to work with government partners while developing commercially viable solutions.
Advance Market Commitments
Another mechanism you may want to watch is the Advance Market Commitments (AMCs), showcased through Innovate UK Business Connect. An AMC is a buyer-led commitment to purchase an innovative product or service once it meets pre-agreed technical, and often commercial, criteria.
By providing a clearer “first customer” pathway, the AMC may help with reducing commercial uncertainty when you’re first entering the tech sector in the UK. These programmes are often used where innovation is needed to tackle major public-interest challenges. Eligibility depends on the specific AMC and whether your solution can meet its criteria.
British Business Bank scale-up funding ecosystem
When it comes to growth capital, the British Business Bank (BBB) plays an important role in the UK’s technology funding landscape. Rather than investing directly in most companies, the BBB operates a network of investment programmes and funds that channel capital into high-growth businesses through venture capital firms and investment partners.
When entering the UK, you may consider several BBB-supported funding initiatives. These include the:
- Future Fund: Breakthrough, which supports deep-tech and R&D-intensive companies
- Enterprise Capital Funds programme, which backs early-stage venture capital funds investing in innovative UK businesses
- Regional Angels Programme, which helps angel investment groups deploy capital into high-growth companies across the country
Tax support and research incentives
In addition to funding, the UK offers a well-developed tax incentive framework for tech companies. When foreign companies compare jurisdictions, this is often where the UK becomes particularly competitive.
40% first-year allowance
Announced in the Autumn Budget 2025, a permanent 40% first-year allowance applies to certain qualifying expenditure on new and unused main-rate plant and machinery. For expenditure incurred on or after 1 January 2026, this allows companies to deduct 40% of the qualifying cost from taxable profits in the year of purchase, with the remaining balance relieved over time under the standard capital allowance rules.
Eligibility depends on the nature of the asset and when the expenditure is incurred. Assets must qualify under capital allowances legislation and meet the conditions for first-year treatment. Specific exclusions apply, including restrictions linked to overseas leasing arrangements.
It is the latest addition to the UK’s plant and machinery allowances, alongside other reliefs such as full expensing, the annual investment allowance (AIA) and writing down allowances.
R&D expenditure credit
From 1 April 2024, the UK introduced a merged R&D regime, replacing previous schemes for accounting periods beginning on or after that date. As of 2026, most companies can claim R&D support through the merged R&D expenditure credit (RDEC) framework.
Eligibility requires a UK company to be within the UK corporation tax regime and undertake projects seeking an advance in science or technology where the resolution of scientific or technological uncertainty is not readily deducible by a competent professional. You may then receive a taxable above-the-line credit calculated as a percentage of qualifying R&D expenditure. The credit can be used to offset corporation tax liabilities and, subject to conditions, may be payable in cash.
Enhanced R&D intensive support
Alongside the merged RDEC, the UK also extends an enhanced R&D intensive support (ERIS) for loss-making small and medium-sized enterprises (SMEs) with particularly high R&D intensity. This measure can support early-stage deep tech companies where R&D spend significantly outweighs revenue.
The ERIS generally applies where qualifying R&D expenditure represents at least 30% of total expenditure. To qualify, you must meet the SME definition for tax purposes and be loss-making in the relevant accounting period.
If you meet the R&D intensity threshold, you may elect to claim under ERIS instead of the merged RDEC for the same expenditure. The enhanced mechanism can increase the effective cash benefit available compared with the standard merged RDEC treatment, depending on your company’s tax position and surrenderable losses.
Patent Box
The UK Patent Box regime remains a longer-term incentive aimed at companies that have successfully commercialised patented technology. It allows eligible profits attributable to qualifying patents to be taxed at a reduced effective corporation tax rate of 10%.
To qualify, your company must hold or exclusively licence qualifying patents granted by the UK Intellectual Property Office or certain recognised European authorities. Your company must also meet the “nexus” requirement, demonstrating that it has undertaken sufficient qualifying R&D activity in relation to the patented invention. The benefit is then calculated by identifying relevant intellectual property income streams and applying a formula-based approach prescribed in legislation.
Investment and equity incentives
The UK’s support for tech and innovation is not limited to R&D incentives. It also includes investment and equity schemes that may make it easier for you to secure funding:
Seed Enterprise Investment Scheme
The Seed Enterprise Investment Scheme (SEIS) is aimed at very early-stage companies. It offers generous income tax and capital gains tax reliefs to individual investors who subscribe for new ordinary shares in qualifying companies. The scheme is overseen by HM Revenue & Customs, which sets the eligibility framework and compliance requirements.
To qualify, your company must be unquoted and carry on a qualifying trade. You must have a permanent establishment in the UK and meet strict size limits at the time of share issue. Gross assets must not exceed £350,000 and your company must have fewer than 25 full-time equivalent employees. Your company must also generally be within three years of commencing its qualifying trade.
Your company can then raise up to £250,000 of funding under the SEIS. Individual investors can invest up to £200,000 per tax year under SEIS and claim income tax relief at 50%, subject to holding conditions.
Enterprise Investment Scheme
The Enterprise Investment Scheme (EIS) supports slightly more mature early-stage companies seeking larger amounts of capital. It also provides income tax relief and capital gains advantages to individual investors, although at different thresholds from SEIS. Like the SEIS, your company must be unquoted and carry on a qualifying trade.
To qualify, your company must have a permanent establishment in the UK and meet certain size thresholds at the time of the share issue. As of 6 April 2026, gross assets must not exceed £30 million immediately before the investment and £35 million immediately after. The company must also have fewer than 250 full-time equivalent employees, although higher limits apply to knowledge-intensive companies.
Under the scheme, your company can raise up to £10 million per year through EIS and other venture capital schemes combined. The lifetime funding limit is £24 million, with higher limits available for knowledge-intensive companies that meet additional criteria.
Enterprise Management Incentives
For high-growth tech companies competing globally for talent, Enterprise Management Incentives (EMIs) are a powerful recruitment and retention tool. They allow qualifying companies to grant tax-advantaged share options to employees, aligning incentives without immediate income tax charges in most cases.
To qualify, your company must be independent and carry on a qualifying trade. Your company must have gross assets not exceeding £120 million and fewer than 500 full-time equivalent employees. This is as of 6 April 2026. At the same time, employees must work at least 25 hours per week or, if less, at least 75% of their total working time for the company.
The maximum value of unexercised EMI options that an individual can hold is £250,000. There is also an overall company limit on the value of EMI options that can be granted.
Talent and visa incentives
Finally, access to global talent is one of the UK’s strongest advantages. The immigration framework includes several routes that accommodate entrepreneurs, innovators and high-potential individuals relocating to the UK:
Global Entrepreneur Programme
If you’re an overseas founder building a high-growth, innovation-led company, the Global Entrepreneur Programme (GEP) is often one of the first initiatives worth considering. Administered by the UK’s Department for Business and Trade, it is a support programme designed to attract internationally mobile founders to establish and scale technology businesses in the UK.
Bear in mind the GEP is not a visa in itself. However, if you’re accepted onto the programme, it can provide endorsement for the Innovator Founder visa route.
The programme offers mentoring from experienced entrepreneurs and sector specialists, introductions to investors and ecosystem partners, and practical guidance on setting up and expanding in Britain. To qualify, you must demonstrate a strong track record, credible intellectual property or a defensible innovation and clear ambition to build a UK-based operation.
Acceptance, however, is competitive. The business model must be genuinely innovative and capable of significant growth.
Global Talent visa
For established leaders in technology, the Global Talent visa is frequently the most flexible and attractive option. Administered by the UK’s immigration authorities under the oversight of the Home Office, it is designed for individuals recognised as leaders or emerging leaders in fields such as financial technology (fintech), artificial intelligence (AI) and cybersecurity.
Endorsement is granted through an approved endorsing body for digital technology. Applicants must demonstrate either exceptional talent, meaning a proven track record as a leading expert, or exceptional promise, indicating strong potential to become a future leader. Evidence usually includes senior roles in product-led companies, significant technical contributions, patents, high-growth achievements or sector recognition.
One of the reasons founders and senior engineers favour this route is its flexibility. There is no requirement for a specific job offer. Visa holders can work for multiple employers, be self-employed or establish their own company. It also offers a relatively clear path to settlement, often after three or five years depending on the category.
If, however, you’re still early in your journey and building a new venture from scratch, the Innovator Founder route may be more appropriate.
Innovator Founder visa
The Innovator Founder visa has become the main immigration route for overseas entrepreneurs who want to establish a new business in the UK. It requires endorsement from an approved body that assesses the business idea against three core criteria: innovation, viability and scalability.
The endorsing body must be satisfied that the concept is genuinely innovative and not already widely available in the UK market. You must also demonstrate the skills and experience necessary to deliver the plan and show credible growth projections. Unlike earlier versions of the route, there is no fixed minimum investment threshold, but you will need to show access to sufficient funds to develop the business.
Offering a three-year validity, this visa allows you to work on your endorsed business and, in many cases, undertake additional skilled work. Alongside ongoing reporting requirements to the endorsing body, you’ll also need to show measurable progress against agreed milestones. This route is well suited to early-stage tech entrepreneurs entering the UK for the first time.
High Potential Individual visa
The High Potential Individual (HPI) visa is a relatively streamlined route aimed at graduates from top global universities. Eligibility depends on having been awarded a degree within the previous five years from an institution appearing on the UK government’s approved global universities list. The qualification must be equivalent to a UK bachelor’s degree or higher.
Unlike the Innovator Founder visa, this route does not require endorsement or a job offer. It grants permission to work, seek employment or establish a business in the UK. The visa is typically granted for two years for bachelor’s or master’s degree holders and three years for PhD holders. Holders may eventually switch to other visa routes while in the UK. It is therefore best viewed as a launchpad rather than a long-term solution.
How we can help
The government is looking to make the UK’s tech sector easier to build in and easier to scale from. Efforts continue to add to the ecosystem, from R&D support and capital allowances to location-based zones and pro-innovation visa routes.
If you’re looking to set up in the UK, our team can support you with incorporation and the full set-up around it, including company secretarial, accounting and tax registration as well as bank account opening. With offices in the UK and other key business locations, we have the capability and availability to support your company growth and expansion. To learn more, please get in touch with us.
Frequently asked questions
Can foreign companies apply for Innovate UK funding directly?
In most cases, Innovate UK funding is designed for UK-registered organisations. This means companies usually need a UK entity to apply for grants or participate in funded innovation projects.
Foreign companies can still participate in several ways. You may establish a UK subsidiary that acts as the applicant, or join a collaborative project led by a UK partner where the majority of funded activity takes place in the UK.
What counts as "qualifying expenditure" for UK tech tax relief?
Qualifying expenditure is generally limited to specific cost categories defined by HM Revenue & Customs (HMRC). Common examples include staffing costs for employees directly engaged in R&D activities, certain payments for externally provided workers, consumables used up in the R&D process, and some software, data and cloud computing costs used in R&D projects. In some cases, payments to subcontractors may also qualify, subject to the applicable scheme rules.
Can foreign firms access UK tax support without moving their global headquarters?
Often yes. Many incentives and reliefs can be accessed through a UK presence without relocating your global headquarters, although the details depend on the specific programme. For the R&D Expenditure Credit (RDEC), for example, the claimant must generally be a company within the UK corporation tax system. This usually means operating through a UK-incorporated company or a UK permanent establishment that carries out qualifying R&D activities.
If you’re considering expanding into the UK and want to understand how to structure your presence to access available tax incentives, our team can help guide you through the options.
Can we claim R&D tax credits if our developers are based outside the UK?
Possibly, but the rules have tightened in recent years. Under the current framework, R&D activities generally need to take place in the UK for the related costs to qualify for relief. Work carried out by developers or engineers located overseas will normally not qualify unless the overseas work is necessary because the conditions required for the R&D are not present in the UK. This exception is relatively narrow and must be clearly justified.
What are the common pitfalls that lead to R&D tax claim rejections?
R&D claims can be rejected or challenged where the technical narrative is weak or does not clearly demonstrate genuine technological uncertainty. Claims may also run into difficulties where costs are incorrectly allocated, where projects fall outside the HMRC’s definition of R&D or where supporting documentation is insufficient.
If you’re planning to claim R&D tax relief or want to review an existing claim, our team can help ensure it is structured properly before submission.
Speak to our experts today
Explore how our corporate services can elevate your business needs
