10 November 2025
4 min read
Learn how to fund innovation at every stage — from feasibility to launch — using grants, tax incentives, and IP planning to strengthen your business and reduce costs.
Developing new products or technologies takes time, precision, and significant investment. From the earliest concept through to testing and commercial launch, innovation demands continuous access to funding — not just for R&D, but for design, prototyping, and scaling. Fortunately, a range of public and private funding mechanisms exist to support innovation at every stage. Here’s how UK businesses can make the most of them.
At the start of any project, funding typically focuses on feasibility, market research, and technical validation. The aim is to test ideas and de-risk innovation before committing large internal resources.
Grant funding is often the best route here, covering activities such as early-stage research, proof of concept, or pilot studies.
Current UK and European options include:
→ Innovate UK themed competitions – Targeted funding aligned with government priorities such as net-zero, digital transformation, and advanced manufacturing.
→ Launchpads – Cluster-based programmes to strengthen regional innovation ecosystems.
→ Knowledge Transfer Partnerships (KTPs) – Three-way collaborations between a business, a university, and a graduate to deliver a defined innovation project.
→ Innovation Loans – For later-stage development, offering repayable funding for commercially viable projects with growth potential.
→ Horizon Europe and European Grants – Funding for collaborative R&D addressing major industrial and environmental challenges.
These early-stage mechanisms can cover a large share of eligible costs, allowing you to explore feasibility without overstretching budgets.
Once a concept is proven viable, the focus shifts to refining technical objectives, assessing risk, and building a solid commercial case.
At this point, Capital Allowances can deliver Corporation Tax relief on qualifying capital expenditure used for R&D — for example, specialist plant and machinery, testing facilities, or integral building features that support innovation.
These allowances accelerate tax relief on infrastructure investments, strengthening cash flow during early development.
Further grant funding may also be available for collaborative or scale-up activity, depending on your sector and region.
This is where most R&D spend occurs — and where R&D Tax Relief becomes particularly valuable.
Whether you’re developing new products, processes, or software, or improving existing ones, the costs of staff time, materials, prototypes, and some subcontracted work may qualify for tax relief.
Under the merged R&D scheme introduced in 2024, eligible companies can recover a proportion of qualifying expenditure as a tax credit or cash benefit, providing a vital source of working capital during development and testing.
When your innovation moves from prototype to market, the Patent Box scheme rewards businesses that retain intellectual property in the UK.
By applying a reduced 10% Corporation Tax rate to profits derived from patented technologies or processes, companies can improve profitability while reinforcing their long-term commitment to innovation.
When used alongside R&D Tax Relief, it supports both the creation and commercialisation of new ideas.
Once your innovation reaches market, the emphasis turns to protection and optimisation — where a clear Intellectual Property (IP) strategy becomes essential.
A joined-up approach to IP planning can:
✅ Strengthen competitive advantage
✅ Support future grant and investment applications
✅ Convert innovation into long-term financial assets
This final phase ensures your R&D continues to generate value long after project completion.
From feasibility to full commercial success, each stage of an innovation project can be supported by targeted funding mechanisms. The key is to combine them strategically, creating a continuous cycle of innovation and reinvestment that fuels sustainable growth.
If you’d like tailored guidance on identifying funding at every stage of your innovation journey, please contact the ABGI Team.
We’ll be happy to discuss your goals and explain how we can assist.