What the UK US pharmaceuticals deal means for biotech funding and life sciences R&D

The new UK US pharmaceuticals deal is not just a trade story. It reshapes the economics of investing in UK biotech and life sciences by improving export margins, signalling higher domestic spend on innovative medicines, and strengthening the UK’s position as a launch market for new therapies. That combination directly influences how CFOs think about R&D tax relief, grant funding and the overall cost of capital for development pipelines.

For biotech and pharmaceutical finance leaders, the deal effectively reduces commercial risk on successful assets while government incentives continue to subsidise the riskiest R&D stages. The strategic question is how to align R&D tax, grants and private capital so that the organisation is positioned to exploit the new market access and pricing environment rather than watching others do so.

How the UK US pharmaceuticals deal links to biotech R&D tax, grants and funding

The agreement delivers three pillars that matter for funding decisions in biotech and life sciences:

• 0 per cent tariffs on UK pharmaceutical exports to the US, with preferential terms for medtech exports, for at least three years. This improves expected post approval margins for successful products and strengthens board cases for investing in late stage development and manufacturing in the UK.
• Around 25 per cent more government spend on innovative medicines, alongside higher cost effectiveness thresholds at NICE and a new health related quality of life value set. More high impact therapies will clear the health economic hurdle, increasing the probability that successful R&D will translate into reimbursed sales.
• Faster, more research friendly regulation, including halving the time to approve clinical trials and a stronger health data infrastructure through the planned Health Data Research Service. This improves the value of running studies and generating real world evidence in the UK.

When commercial and regulatory conditions become more favourable, R&D projects further up the pipeline become financeable. That is where R&D tax relief and non dilutive grant funding in life sciences remain critical. They allow CFOs to bring forward or expand projects that can now plausibly reach a more attractive US and UK market.

Inside the UK US pharmaceuticals deal

The deal sits under the broader UK US Economic Prosperity framework and gives the UK a uniquely generous tariff position:

• The UK becomes the only country with a zero tariff on pharmaceutical exports into the US market, protecting UK based manufacturing and making the UK a more attractive base for global supply chains.
• Preferential conditions for medtech exports remove the risk of new tariffs and are intended to unlock further inward investment into UK medtech and diagnostics.
• Government commits to around 25 per cent higher investment in innovative medicines, enabling NICE to recommend drugs that previously failed purely on cost effectiveness grounds, including breakthrough oncology treatments and therapies for rare diseases.
• NICE’s cost effectiveness range will rise from roughly £20,000 to £30,000 per quality adjusted life year to £25,000 to £35,000, supported by a modernised value set for judging health states, which should improve average cost effectiveness for innovative medicines.
• The UK has secured mitigations under the US Most Favoured Nation drug pricing initiative, reducing the risk that UK reimbursement policies will suppress global prices or discourage early launches.

Major companies have already responded. The government notes that firms such as Moderna, Bristol Myers Squibb and BioNTech are committing significant new capital, with Bristol Myers Squibb alone anticipating upwards of 500 million dollars of investment in UK research, development and manufacturing over five years.

For CFOs, this is a clear demand signal. It suggests that investment committees and global portfolio boards are re rating the UK as a place to site clinical development, advanced therapy manufacturing and data driven research.

Funding implications for biotech and life sciences finance leaders

1. Revenue visibility and asset valuation

Improved access to the US market with zero tariffs, combined with a more generous domestic medicines budget, strengthens revenue forecasts for successful assets. That has several finance consequences:

• Net present values for late stage assets with US potential increase, which can justify higher near term R&D spend and capex for UK manufacturing.
• More products clear internal rate of return hurdles, particularly in oncology, rare disease and advanced therapies where the new NICE thresholds are most relevant.
• The UK’s positioning as an early launch market supports premium pricing and speeds time to peak sales for certain indications.

For biotech CFOs managing investor expectations, this environment can support stronger narratives around pipeline value, provided the funding stack can sustain the higher level of innovation spend required.

2. R&D tax relief as a core part of the capital stack

HMRC data show that R&D tax relief remains one of the largest targeted innovation incentives in the UK. In 2023 to 24, companies claimed around £7.6 billion of support on £46.1 billion of qualifying R&D expenditure, with manufacturing and professional, scientific and technical sectors accounting for the majority of relief.

That matters for life sciences because:

• Many biotech and pharma companies fall into those dominant sectors.
• Relief is increasingly concentrated in larger claims rather than very small filings, which aligns with the capital intensity of clinical and manufacturing scale up.

For life sciences, key features of the regime include:

• SME R&D relief for smaller innovators, offering an enhanced deduction on qualifying costs and a payable credit for loss making, R&D intensive SMEs.
• The RDEC and merged scheme for larger groups and grant funded SMEs, providing a taxable expenditure credit on eligible R&D spend.
• Qualifying cost categories that map closely to biotech economics, including salaries for scientists, externally provided workers, clinical trial expenditure, consumables and relevant software and cloud costs.

Used correctly, R&D tax relief effectively reduces the net cost of research programmes and extends runway without additional dilution. In the context of the UK US pharmaceuticals deal, CFOs can justify accelerating or broadening programmes that are both technically eligible and now more commercially attractive.

3. Grant funding to de risk early and translational research

The trade agreement does not replace the need for grant funding. Instead, it increases the value of progressing candidates through earlier, riskier stages so that they are ready to exploit improved market access.

Life sciences companies can continue to draw on substantial non dilutive grant funding, for example:

• Innovate UK for therapeutics, drug delivery, manufacturing innovation and digital health.
• Biomedical Catalyst for feasibility, translational projects and early clinical trials.
• NIHR for patient centred research with strong NHS impact.
• European and international programmes such as Horizon Europe or the EIC Accelerator for cross border consortia and scale ups.

Depending on technology readiness and applicant type, grants can support 70 to 100 per cent of eligible costs. The challenge for CFOs is navigating interactions between grants and the R&D tax regime, particularly under the merged scheme where notified state aid can shift work into RDEC treatment.

FI Group’s perspective on life sciences funding strategy

At FI Group, we specialise in R&D tax relief, innovation grants and broader funding strategy, and we see the UK US pharmaceuticals deal as a catalyst for more deliberate funding architecture in biotech and medtech.

Drawing on its work with UK, European and US based clients, FI Group typically helps CFOs to:

• Build an integrated funding roadmap that sequences grants, R&D tax credits, equity and debt around key development and regulatory milestones.
• Reassess R&D site strategy in light of the UK’s tariff and reimbursement advantages, including the implications for group relief and transfer pricing.
• Strengthen technical narratives for R&D tax claims so that they are consistent with regulatory dossiers, clinical development plans and health economic models.
• Benchmark grant opportunities across Innovate UK, Horizon Europe and transatlantic programmes, focusing on competitions that match the company’s therapeutic focus and long term commercial route.

Because FI Group operates across major life sciences centres, including the UK, wider Europe and the United States, we can help management teams understand how the UK US deal interacts with EU funding, US BARDA or NIH partnerships, and global tax positions, without turning the funding strategy into a patchwork of unconnected incentives.

Practical actions for biotech and life sciences CFOs

In practical terms, finance leaders in the sector may wish to:

1. Re segment the pipeline
   Identify assets most likely to benefit from preferential US access or a more generous UK pricing environment and reassess their internal business cases.
2. Rebuild the R&D funding model
   Update financial models so that R&D tax relief, grant income and the revised commercial assumptions are integrated rather than treated as add ons.
3. Stress test compliance and enquiry readiness
   Ensure documentation, cost allocation and subcontractor treatment align with the merged R&D scheme and with evolving HMRC expectations, particularly for large clinical and manufacturing projects.
4. Revisit the location strategy
   Evaluate whether more discovery, development or manufacturing activity should be sited in the UK to maximise the combined benefit of zero tariffs, enhanced medicines budgets, data access and R&D incentives.
5. Engage early with external funders
   Use the new policy environment to frame discussions with grant awarding bodies and private investors around the improved risk return profile of UK based life sciences projects.

FAQs

Before the detailed FAQ schema is implemented, it is helpful to address common questions directly.

1. How does the UK US pharmaceuticals deal change the business case for UK biotech R&D?

By removing US tariffs on UK pharmaceutical exports, increasing domestic spend on innovative medicines and speeding up clinical and data infrastructure, the deal raises expected returns on successful therapies. That strengthens the business case for investing in R&D that is also supported by R&D tax relief and grants.

2. What does this mean for R&D tax relief claims in life sciences?

The underlying R&D tax rules are unchanged by the deal, but more projects will now have stronger commercial rationales. Finance teams should ensure all eligible scientific and clinical work is captured within the SME, RDEC or merged scheme, with careful treatment of grant funded activity common in biotech.

3. Can companies combine grants with R&D tax relief under the new environment?

Yes. Innovate UK, Biomedical Catalyst, NIHR and European programmes continue to provide substantial non dilutive funding, and their coexistence with R&D tax relief remains possible, although notified grants can affect which scheme applies. Rigorous cost allocation and documentation are essential to avoid double counting and to maintain compliance.

4. Will the deal guarantee US market access for all new UK developed medicines?

No. The agreement improves tariff conditions and creates a more favourable context for UK pharmaceuticals, but regulatory approval, pricing negotiations and individual market access strategies are still required. Companies must continue to plan for US payer dynamics and regulatory risk alongside the improved trade conditions.

5. What should life sciences CFOs prioritise in the next 12 to 24 months?

CFOs should prioritise pipeline mapping against the new trade and pricing environment, optimisation of R&D tax and grant positions, and strengthening of enquiry ready evidence for claims. They should also reassess location and manufacturing choices in the light of zero tariffs and improved domestic medicines budgeting.

FI Group UK moves to a new home in the heart of the City

FI Group UK has officially moved into our new London office at 40 Leadenhall Street, right in the middle of the City of London’s financial district. It is more than a change of address. It is a statement about where we want to be for our clients, our team and the future of innovation funding in the UK.

From this new base, we are even better positioned to support CFOs, Heads of Tax and founders who need clarity on R&D tax reliefs, grants and innovation finance in an environment that is becoming more complex, more international and more strategic every year.

Why 40 Leadenhall Street, London?

40 Leadenhall Street is a new landmark office development in the City of London insurance and banking district, within walking distance of Bank, Liverpool Street and Fenchurch Street stations. It brings together global financial institutions, high growth companies and advisory firms under one roof in one of Europe’s most connected business locations.

For FI Group UK, this location matters for three reasons:

• It places our London R&D tax consultancy and London grants consultancy side by side with the decision makers we support every day.
• It embeds us in a genuinely global financial hub, where international capital, specialist lenders and innovation ecosystems intersect.
• It gives our team the space and facilities to host board level discussions, technical workshops and training for clients who are navigating multi country R&D and grant portfolios.

40 Leadenhall has been designed as a modern workplace that can accommodate thousands of professionals, with premium amenities, collaboration spaces and event facilities. For a consultancy that spends so much time helping others plan for the future, it is the right kind of environment for our own next chapter.

A stronger base for R&D tax and grants consultancy in London

Our work in London has always been about more than compliance. We work with finance and leadership teams who want to treat R&D tax relief, grants and innovation loans as levers in a wider capital allocation strategy, not just a year end exercise.

From 40 Leadenhall Street we can:

• Meet CFOs, Group Controllers and Heads of Tax in person to map global R&D incentives across the UK, Europe and other key jurisdictions.
• Help high growth London businesses understand how R&D tax credits, ERIS, UK grant competitions and European funding can fit together over a multi year roadmap.
• Provide a local, senior team who can explain legislative changes and HMRC’s evolving compliance approach in clear commercial language.

Whether a client searches for “London R&D tax consultancy” or “London grants consultancy”, they are ultimately looking for the same thing: a partner who can reduce risk, protect cash flow and help them keep investing in innovation with confidence. That is the role we intend to play from our new City base.

Designed for collaboration, clients and the team

This move is also about giving our people the right space to do their best work. The new office at 40 Leadenhall Street offers:

• Modern collaboration areas for technical and financial teams to work together on complex claims and applications
• Meeting rooms and event spaces where we can host client workshops on topics such as global R&D incentives, cash flow planning and grant readiness
• Quiet spaces for detailed technical work on R&D projects, cost allocation and supporting documentation

It reflects the reality of our work. R&D tax and grants consultancy is a team sport. It requires tax specialists, engineers, scientists, finance professionals and sector experts to interpret guidance, challenge assumptions and produce claims that are robust under scrutiny. A high quality environment helps us bring those disciplines together around the client.

Edinburgh remains a core hub in our UK footprint

While London is an important strategic step, our Edinburgh office remains very much at the heart of FI Group UK. We continue to support innovative businesses across Scotland from our base there, working closely with companies in advanced manufacturing, energy, life sciences, software and more.

For organisations looking for R&D tax consultants in Edinburgh or grants consultants in Edinburgh, our message is simple. Clients in Scotland still benefit from a dedicated local team that understands policy, the regional innovation landscape and the realities of scaling from seed to Series A and beyond.

The combination of Edinburgh and London gives FI Group UK genuine UK wide reach. It allows us to sit alongside clients wherever they are, while connecting them into a single team and a single methodology.

 

FI Group is a global leader in R&D incentives and innovation funding, with offices across Europe, the Americas and Asia. That footprint matters for UK headquartered groups whose R&D, manufacturing and IP are increasingly distributed across multiple jurisdictions.

From 40 Leadenhall Street and Edinburgh we can:

• Coordinate multi country R&D tax, grant and incentive strategies through a single point of contact
• Help CFOs avoid double counting or missed opportunities when projects span several territories
• Translate local rules into a consistent, board level view of innovation funding, risk and return

In short, your headquarters sees the full picture, and your teams feel the local support. Global operations do not need global headaches.

What our team says

Our move to 40 Leadenhall Street is ultimately about the people behind the work. As Dr Fawzi Abou-Chahine, Funding Director at FI Group UK, puts it:

“This new London office positions us exactly where our clients expect a strategic advisor to be. We can sit across the table from CFOs, founders and technical leaders, understand their innovation agenda and then connect them to the right mix of R&D tax reliefs and grants in the UK and internationally. It is a natural next step in our growth.”

 

Speak to our team

If your business is investing in innovation and you want a clearer, more strategic approach to R&D tax relief and grants, our team in London and Edinburgh is here to help. Contact FI Group UK to arrange a conversation at 40 Leadenhall Street or online and see how we can strengthen your innovation funding strategy across the UK and internationally.

What is the new R&D advance assurance pilot?

From Spring 2026 the government will pilot a targeted advance assurance service for R&D tax relief, allowing any SME planning to claim to apply for HMRC clearance before filing. The aim is to give earlier certainty on eligibility while tightening controls against error and fraud, without changing the headline credit rates.

Why is HMRC moving to an advance assurance regime?

HMRC is shifting towards advance assurance because error and fraud in R&D reliefs have been unacceptably high, and compliance activity has already had to ramp up significantly.

Over the last few years, R&D tax reliefs have been reframed as a high risk part of the corporation tax system rather than a benign incentive:

• HMRC estimates that historic error and fraud in R&D reliefs reached double digit percentages of total cost, worth well over a billion pounds in some years.
• In response, HMRC has expanded its R&D compliance team from around 100 people to more than 500 and tightened claim processes, including mandatory Additional Information Forms and pre-notification rules.
• Media coverage and parliamentary reports have highlighted dubious claims and aggressive advisers, putting political pressure on the Treasury to show it can police the regime without withdrawing support for genuine innovators.

Against this backdrop, HMRC’s consultation on R&D tax relief advance clearances set three objectives: reduce error and fraud, improve customer experience and increase certainty so businesses can plan R&D investment confidently.

Professional bodies and firms are broadly supportive of better up-front certainty, but they stress two concerns:

• The existing advance assurance model is narrow in scope and administratively heavy.
• If mandatory clearances are mishandled, they could simply move the bottleneck from post-claim enquiries to pre-claim approvals.

For CFOs, the direction of travel is clear. The UK is moving from “file and hope” to “pre-assess and prove”. R&D tax relief will increasingly resemble other regulated, assurance-driven tax processes.

How will the targeted advance assurance pilot work for SMEs?

The pilot is designed to broaden access to assurance and to test what a future, possibly more permanent clearance system could look like.

In outline, the Autumn Budget materials confirm that:

• The pilot targeted advance assurance service will start in Spring 2026.
• It is open to any SME planning to claim R&D relief, rather than only a narrow band of first-time claimants.
• It follows the consultation on widening advance clearances, including options for mandatory clearances for some claimants and voluntary routes for others.
• The policy aims to give companies clearer up-front signals on whether their projects and costs are likely to qualify, while letting HMRC detect high risk cases before cash leaves the system.

Although detailed guidance will follow, CFOs should expect a process along the following lines:

1. Application before or early in the project
   • Description of the planned R&D activities and uncertainties
   • Explanation of how the company interprets the BEIS definition of R&D
   • High level cost profile and ownership of risk
2. HMRC risk assessment and dialogue
   • Clarification questions on boundaries of eligible work and contracted out activities
   • Possible conditional assurance based on the project staying within described parameters
3. Assurance window
   • If granted, assurance is likely to cover a fixed number of accounting periods, similar to the existing regime, provided activities remain aligned with what was agreed.

In other words, the pilot turns the current informal conversations many companies have with advisers into a formal, binding pre-assessment step with HMRC for those SMEs willing to invest in getting ahead of the curve.

What does this shift mean for CFOs and finance teams?

For CFOs, the shift to advance assurance changes R&D tax relief from a back-office optimisation into a board-visible risk and capital allocation decision.

Key implications for finance leaders:

• Higher perceived risk on historic and future claims
  The consultation itself is a reminder that HMRC believes past non-compliance has been widespread. Boards will expect CFOs to be able to defend historic positions and show how future claims are being de-risked.
• More internal resource required before filing
  Securing assurance will require coordinated input from technical, finance and tax teams before costs are committed. The days of reconstructing R&D narratives several months after year end are ending.
• Governance pressure from audit committees and investors
  With advance assurance framed as a key tool to reduce fraud and error, auditors are likely to ask why a material claimant is not using it. R&D tax will start to feature more regularly in audit committee and risk reports.
• Cross-border complexity for groups
  Other countries already use pre-approval or ruling mechanisms for innovation incentives.
  Global CFOs will need to coordinate UK advance assurance alongside rulings in Europe, North America and Asia, so that group R&D strategy and tax assurance are aligned rather than piecemeal.

The underlying message is simple: R&D relief is now part of the cost of capital conversation, not just a compliance line item.

From year end scramble to governed R&D tax process

The advance assurance pilot will reward companies that treat R&D tax relief as a governed process, not a scramble to “find costs” at filing.

A governed approach typically includes:

• Clear R&D tax policy
  • Statement of R&D strategy, risk appetite and what will not be claimed
  • Alignment with broader innovation and capital investment strategy
• Defined governance structure
  • Board or audit committee oversight of R&D relief claims
  • Named technical, finance and tax owners for each claim period
  • Integration with project approval gates and investment committee papers
• In-year evidence capture
  • Documentation of uncertainties, experiments and failures as projects progress
  • Time writing or activity logging tied to projects, not just cost centres
  • Early identification of borderline projects for adviser or HMRC discussion
• Standardised documentation set
  • Technical narratives structured around the BEIS definition and HMRC’s Additional Information Form
  • Cost breakdowns mapped to qualifying categories and reconciled to ledgers
  • Internal sign-off trail that supports director responsibility

A simple way to describe this in a board pack is through an “old world vs new world” comparison:

Aspect	File and hope (old)	Pre-assessed and governed (new)
Timing of R&D work vs claim	Claim built many months after year end	Activities and costs assessed during the project
Role of the board	Limited visibility of detailed claims	Regular oversight via audit and risk reporting
HMRC interaction	Enquiries after cash is received	Dialogue before claims and during assurance
Evidence	Retrospective narratives and sampling	Contemporaneous records and structured evidence
Risk profile	High enquiry risk and potential clawbacks	Lower enquiry risk, but higher front-loaded effort

For CFOs, the question is no longer “Can we still claim R&D tax relief”, but “Are we willing to own a governed process that would withstand future advance assurance scrutiny”.

International context: how does UK advance assurance compare?

The move towards pre-assessment does not happen in isolation. Many OECD countries already embed pre-approval or ruling mechanisms into their innovation tax regimes, often as a condition for higher rates or faster refunds.

HMRC’s consultation explicitly draws on international comparisons and explores different stages at which assurance could be given, from early project planning through to pre-filing checks. nal groups, this creates both challenges and opportunities:

• Challenge
  Disparate rules on where work can be done, subcontracting, and grant interactions already make global R&D tax governance complex. Advance assurance adds another procedural layer.
• Opportunity
  A structured UK advance assurance regime can be aligned with existing ruling and pre-approval processes elsewhere, giving group treasury and tax teams more predictable after-tax cash flows from innovation.

FI Group’s own International R&D Tax Schemes 2025 guide sets out the different models in over 20 countries. For board-level discussions, the message is that the UK is normalising, not isolating, its approach.

 

How FI Group helps CFOs prepare for R&D advance assurance

FI Group already acts as a strategic partner for CFOs who want R&D tax relief to support, not undermine, their funding strategy. FI Group UK+2FI Group UK+2

Our role in the new regime is threefold:

1. R&D risk and readiness review
   • Independent assessment of historic claims, governance and documentation
   • Mapping of open enquiry risks against HMRC’s current focus areas
   • Recommendation of which projects and entities are best suited for early use of advance assurance
2. Design of a governed, in-year R&D process
   • Alignment of project approval, budgeting and technical documentation with anticipated assurance requirements
   • Integration with your existing R&D Tax Credit Claim Process and financial controls
   • Templates for technical narratives and Additional Information Forms that can be repurposed for assurance applications
3. End-to-end support on claims and enquiries
   • Technical and tax support from PhD-level sector specialists
   • R&D Tax Credit Review Service for extra assurance before filing
   • R&D enquiry defence capability if HMRC challenges past claims, with enquiry rates already materially below the UK average for our client base.

FI Group operates in more than 15 countries, giving UK-based CFOs global reach with local expertise, and a single senior contact who can coordinate UK advance assurance alongside international R&D incentives, grants and innovation loans.

“CFOs can no longer afford to treat R&D tax as a late adjustment. Advance assurance pushes the discussion into the boardroom, where R&D investment, tax risk and funding strategy meet. The good news is that with the right governance and evidence, you can turn this into a powerful source of certainty rather than just more paperwork.”
Dr Fawzi Abou-Chahine, Funding Director, FI Group UK

If you are considering advance assurance, now is the time to book an R&D risk review ahead of the pilot and to ensure your 2025 claims are built in a way that can be re-used rather than rewritten in 2026.

FAQs on R&D advance assurance and SME claims

Before the FAQs, a brief note. The pilot scheme is still being designed, but the direction is set. These answers reflect the Budget announcements and current consultation outcome and will need updating as HMRC publishes detailed guidance.

Is the new advance assurance pilot mandatory?

No. The targeted advance assurance pilot announced for Spring 2026 is a voluntary service for SMEs planning to claim R&D relief. However, the consultation does explore mandatory clearances for certain groups in future, so CFOs should treat this as a testing ground for a more structured regime.

Which companies are likely to benefit most?

SMEs with material R&D claims, a strong pipeline of projects and a desire to reduce enquiry risk will benefit most. Groups with external investors, complex structures or cross-border R&D are also likely candidates, because assurance can simplify conversations with boards, auditors and overseas tax authorities.

Does advance assurance guarantee my R&D claim will be accepted?

Advance assurance should give a strong presumption of acceptance provided the company keeps projects within the agreed scope and documents changes properly. It is not a blank cheque. CFOs will still need to maintain robust evidence and ensure costs, subcontracting and overseas work are treated correctly in line with current rules.

How should CFOs with overseas R&D prepare?

Start by mapping your global R&D portfolio and incentives. Where you already use pre-approval mechanisms overseas, align UK processes and documentation so that your technical narratives, project classifications and governance model work across jurisdictions. FI Group can coordinate this through its international R&D tax and grants advisory teams.

When should we start acting on all this?

CFOs should begin in the 2025 accounting period, not when the pilot goes live. That means: reviewing historic claims, tightening in-year documentation, defining governance roles and deciding which 2026 projects would be first candidates for assurance. Early movers are likely to secure smoother HMRC engagement.

What has Rachel Reeves changed for VCTs in the 2025 Budget?

The 2025 Budget keeps VCTs and EIS at the heart of the UK’s venture ecosystem, but it cuts VCT income tax relief from 30 per cent to 20 per cent while sharply increasing company and lifetime investment limits and size thresholds from April 2026.

At a high level, the package looks like this:

• VCT income tax relief cut
  • Upfront Income Tax relief for new VCT subscriptions falls from 30 per cent to 20 per cent.
  • Dividends and capital gains from qualifying VCTs remain tax free.
• EIS relief maintained but limits raised
  • EIS retains 30 per cent Income Tax relief, but company and lifetime investment limits rise strongly.
• Bigger cheques, bigger companies
  • Annual and lifetime investment limits for VCT and EIS are lifted, with reporting suggesting:
    • Annual investment limits rising towards £10 million
    • Lifetime limits up to around £24 million
    • Gross assets thresholds increasing to c. £30 million
• Schemes extended to 2035
  • Earlier announcements already extended EIS and VCT to 5 April 2035, providing long term certainty.

In short, the envelope gets larger but the main retail incentive for VCT investors becomes less generous at entry.

Old versus new: at a glance for CFOs

Feature	Before 2025 Budget	After 2025 Budget (from April 2026)	Direction for scale ups
VCT Income Tax relief rate	30% on up to £200k per year	20% on qualifying new VCT subscriptions	Less attractive to higher rate investors
EIS Income Tax relief rate	30% on up to £1m, £2m KI companies	30% retained	Neutral to positive
Company investment and asset limits	Lower limits, tighter gross assets caps	Limits and thresholds materially increased	Better for later stage scale ups
Scheme duration	Sunset risk from 2025	Extended to April 2035	Long term certainty

Why cut VCT relief while raising VCT and EIS limits?

The political message is that reliefs should be more focused on genuine growth capital, not simply tax shelters. By cutting VCT relief but lifting limits, ministers are signalling support for larger, higher growth scale ups while asking wealthier investors to accept less generous upfront subsidies.

There are three overlapping narratives:

1. Rebalancing “work versus wealth”
   • The Budget also raised taxes on dividends, savings and property income, part of a wider shift towards taxing capital and higher earners more heavily while keeping the corporation tax headline rate unchanged.
2. Prioritising scale ups over micro start ups
   • Parliamentary and think tank work in recent years has criticised the difficulty UK firms face in scaling, not just starting, and has called for higher VCT and EIS limits for companies that are already beyond seed stage.
3. Budget constraint and revenue raising
   • Reducing VCT relief from 30 to 20 per cent is projected to raise substantial revenue by 2027, partly offsetting the cost of expanded limits and other pro growth measures.

For CFOs, the motive matters less than the mechanics. The relief cut changes the economics of attracting VCT capital, even as the system becomes more accommodating of larger rounds.

Who are the winners and losers from the VCT changes?

Later stage, high growth scale ups that already command institutional interest stand to benefit most, while early stage companies reliant on tax motivated VCT investors may find rounds slower and more expensive to close.

Winners versus losers

Group	Likely outcome
Later stage scale ups	Benefit from higher company and lifetime limits and larger cheques per deal.
Knowledge intensive companies	Retain strong EIS support and gain room for larger follow on investments.
Fund managers with strong brands	Still able to market VCTs on diversification, dividends and access to deal flow.
Early stage, riskier SMEs	Face more selective investor appetite as relief falls and risk free rates stay higher.
High income retail investors	See less value in VCTs as a tax planning tool compared with pensions or ISAs.
Founders outside London	Risk being squeezed if capital retrenches further to familiar, urban clusters.

Investor commentary already reflects this split. Industry bodies and advisers have consistently argued that a stable and generous relief regime is a key reason why the UK venture market punches above its weight globally. Cutting front end relief risks eroding that edge at the margin.

What do these changes mean for scale up CFOs?

For scale up CFOs, the VCT package means VCT backed equity is likely to remain available, but the marginal cost of securing it may rise and the bar for investor conviction will be higher.

Practically, you should expect:

• Harder or slower VCT backed rounds at the margin
  • Less generous tax relief makes it marginally harder for VCT managers to raise new capital from high rate taxpayers, especially when EIS and other alternatives still offer 30 per cent relief.
• Increased sensitivity to pricing and risk
  • If VCTs have to work harder to raise funds, they are likely to be more disciplined on entry valuations and risk. That affects term sheet negotiations for Series A to C scale ups.
• Interaction with exit and CGT changes
  • Higher taxes on capital gains and the halving of Employee Ownership Trust relief mean founders and key staff will also be more sensitive to post tax outcomes from exits and secondary sales.
• Regional and sector skew
  • Long standing concerns about capital concentration in London and the South East may intensify if a reduced relief rate makes investors still more selective.

From a board perspective, the message is that equity is still available but less subsidised, so your weighted average cost of capital is drifting upward unless you deliberately counterbalance it with non dilutive sources.

How should VCTs sit alongside grants and R&D tax relief?

The VCT changes strengthen the case for treating grants and R&D tax relief as core parts of your capital structure rather than “nice to have” add ons. Over the life of a project, a well designed mix of public funding can materially offset the drag from weaker investor tax relief.

Three practical moves stand out:

1. Use grants to de risk early R&D before VCT capital comes in
   • Innovate UK and mission led programmes continue to back higher risk, pre revenue R&D through grants and innovation loans. If those instruments carry the earliest risk, your VCT round can focus more on scaling proven propositions rather than funding basic feasibility.
2. Optimise R&D tax relief as a recurring return enhancer
   • HMRC’s latest statistics show around £7.6 billion in R&D tax relief still being claimed annually, even as claim numbers fall and scrutiny rises.
   • For capital budgeting, that relief is effectively a recurrent, probabilistic uplift to project IRR which can be factored directly into hurdle rate models.
3. Design a funding stack that speaks to institutional investors
   • Many larger funds and family offices now expect a clear narrative on how public funding is used to amplify, rather than substitute, private capital. A roadmap that sequences grants, R&D credits and later VCT or growth equity shows capital discipline and policy alignment.

If you have overseas operations, the calculus is cross border. FI Group’s European and US presence means you can benchmark UK incentives against, for example, Horizon Europe participation or national R&D credits in other jurisdictions, and decide where marginal projects should sit. Global operations do not need global headaches.

How FI Group helps CFOs rebalance equity, grants and R&D tax

FI Group positions VCT and equity strategy within a broader innovation funding architecture, rather than treating it in isolation from grants or tax. In the UK that typically involves:

• Mapping your funding history and planned VCT or EIS rounds against UKRI and Innovate UK opportunities
• Quantifying how specific grant and R&D tax strategies affect project level IRR and group level cost of capital
• Stress testing capital plans against tax changes on gains, dividends and employee ownership routes
• Translating a multi country innovation roadmap into a coherent, locally compliant funding stack

Because FI Group operates across Europe, the UK, the United States and Latin America, we can align HQ expectations with local execution. Your HQ sees the full picture. Your teams feel the local support.

As Dr Fawzi Abou Chahine, Funding Director at FI Group UK, puts it:

“CFOs are not asking whether VCTs will disappear. They are asking what happens to their cost of capital when VCT relief, R&D tax incentives and grant intensity all move at once. Our job is to show, with numbers, how a different blend of public support can keep innovation projects investable even as the tax mix hardens.”

If you are exploring how VCT fits into your funding strategy, you may also want to review our R&D tax relief advisory services and our UK and European grant funding support, which can be structured alongside equity to maximise non dilutive leverage.

FAQs on VCT changes for innovation focused SMEs

A short briefing section you can lift directly into a board pack or investment committee paper.

Does the VCT relief cut mean VCTs will stop investing in smaller companies?

No. VCTs remain designed to back smaller, high growth trading companies and the schemes have been extended to 2035. The relief cut may reduce investor appetite at the margin, but managers still need deal flow and the higher limits create more space for follow on funding of successful portfolio companies.

Will EIS become more important relative to VCT after the Budget?

Likely yes, at the margin. EIS retains its 30 per cent Income Tax relief and continues to be positioned as a high risk, high incentive route for backing earlier stage companies. For CFOs, that means funding strategies will need to balance both schemes depending on stage, sector and investor base.

How should CFOs update their capital planning models?

You should:

• Revisit discount rates and hurdle IRRs for projects that assumed relatively cheap VCT equity
• Model downside scenarios where VCT allocations take longer to raise or come with tighter terms
• Overlay grant and R&D tax scenarios to see how far public support can restore target returns

What is the single most important action for the next funding round?

For most scale ups, it is to rebuild the funding mix narrative. Arrive at investor meetings with a clear explanation of:

• How much risk is being carried by grants and innovation loans
• How R&D tax relief is expected to contribute over the project life
• How VCT or growth equity fits into that pipeline, rather than funding everything alone

That makes you easier to back in a world where investor relief is less generous and scrutiny is higher.

2025: The Year Innovation Capital Got More Expensive

Rachel Reeves’s 2025 Budget raises the after tax cost of equity for UK scale ups. We explain the new taxes on dividends, capital gains and employee ownership, and how CFOs can keep the blended cost of capital competitive through grants, loans and optimised R&D tax relief.

What changed for innovation capital in the 2025 Budget?

The 2025 Budget left the main corporation tax rate unchanged but increased tax on dividends, savings, property income, capital gains and employee ownership exits. That combination raises the after tax cost of equity for founders and investors, even as ministers continue to talk about growth and innovation.

For CFOs, it is the interaction of measures that matters, not any single line item. The key moves affecting innovation capital are:

• Dividend, savings and property income taxes
  • Tax rates on dividends, property and savings income rise by 2 percentage points from April 2026, taking basic rate dividend tax to 10.75 per cent and higher rate to 35.75 per cent.
  • The stated rationale is to close the gap between tax on work and tax on wealth.
• Higher capital gains tax on business assets
  • Previous budgets had already raised general CGT rates on share disposals from 10 to 18 per cent at the basic rate and from 20 to 24 per cent at the higher rate, with transitional steps for entrepreneurs.
  • Business Asset Disposal Relief (BADR) and Investors’ Relief, historically offering a 10 per cent rate on qualifying gains, are being aligned with the 18 per cent lower CGT rate from April 2026.
• Employee Ownership Trusts hit for the first time
  • CGT relief for owners selling to Employee Ownership Trusts (EOTs) has been cut from 100 per cent to 50 per cent with immediate effect, a change the OBR expects to raise around £900 million a year from 2027/28.
• Wealth focused tax mix, record tax burden
  • The Office for Budget Responsibility projects the overall tax burden rising towards 38 per cent of national income, with much of the extra revenue coming from taxes on wealth, property and higher earners.

In other words, the government has chosen to keep the headline corporation tax rate steady while tightening the tax take on exits, distributions and asset income. For innovation driven businesses, that is exactly where founder and investor returns are realised.

Snapshot of the changes that matter for founders and investors

Measure	Before	After	From when	Who it hits most
Dividend tax (higher rate)	33.75%	35.75%	2026/27 onwards	Founder managers, angel and VC investors
CGT lower rate on shares	10%	18%	2025/26 onwards	Basic rate founders and early investors
CGT higher rate on shares	20%	24%	2025/26 onwards	Higher rate founders, institutional investors
BADR / Investors’ Relief rate	10%	18%	2026/27 onwards	Entrepreneurs, business angels
EOT CGT relief	100% relief on qualifying disposals	50% relief, balance taxed at CGT rates	26 Nov 2025	Founders planning employee ownership exits

How did these changes increase the after tax cost of equity?

By raising taxes on dividends, gains and employee ownership exits, the Budget reduces the net return founders, early investors and fund managers achieve on successful innovation. That, in turn, pushes up required internal rates of return and the hurdle rates used for innovation projects.

A simple illustration:

• Under the old 10 per cent BADR rate, a founder realising a £10 million gain paid £1 million in CGT and kept £9 million.
• At 18 per cent, the same transaction yields £8.2 million after tax, a reduction of £800,000.

That eight to nine per cent reduction in net proceeds is economically equivalent to shaving a full turn off an exit multiple at many deal sizes.

Similar mechanics now apply at portfolio level:

• Higher dividend and savings tax rates reduce the attractiveness of equity income as a reward for patient capital.
• The cut to EOT relief means that what had been a zero CGT route to succession now carries a material tax charge, reducing the value of employee ownership as an exit option.

Layered on top are earlier decisions to increase the taxation of carried interest and to bring more carried interest into income tax rather than CGT over time, which directly affects the net returns of fund managers backing high risk innovation.

The result is straightforward: equity becomes more expensive, because investors require higher pre tax returns to achieve the same post tax outcomes. That higher required return ultimately feeds back into:

• More demanding valuation discussions for growth rounds
• Stricter expectations on time to exit and scale
• Tougher internal hurdle rates on capital allocated to exploratory or long horizon R&D

CFOs are already hearing this language in term sheet conversations.

How have investors and commentators reacted?

Initial reaction to the Budget has been sharply divided. Commentators on the centre left have broadly welcomed the shift towards taxing wealth and property more heavily, but business groups have warned about the signal it sends to entrepreneurs and scale up investors.

• The Budget has been framed by the Chancellor as making the system fairer by increasing taxes on income that does not bear National Insurance, particularly dividends and property.
• The Resolution Foundation and others note that freezing thresholds and raising wealth taxes together leave the overall tax burden at historically high levels, with middle income households squeezed.
• Business groups and founder networks have warned that repeated “tax raids” on entrepreneurs and investors risk harming the UK’s competitiveness for investment and talent.

Professional and legal commentary on EOTs has also shifted tone. What was once marketed as a clean, tax efficient route to employee ownership is now seen as more complex, with changing rules and higher fiscal risk for founders contemplating that route.

In the R&D space, professional bodies have warned that changes to R&D tax relief and tighter compliance are already discouraging some genuine innovators.

For a scale up CFO, the message from all of this is not “capital is going to vanish”, but rather: more of the value created by your innovation portfolio will be recycled to the Exchequer before it reaches founders and investors. The bar for investment approval rises accordingly.

What does this mean for CFOs of UK scale ups?

For CFOs, the challenge is not theoretical. The 2025 Budget changes feed directly into how you model, negotiate and report on innovation investment.

In practice, you are likely to face:

• Higher required IRRs on innovation projects
  Investment committees will ask for stronger evidence that projects clear higher hurdle rates, particularly in capital intensive or long horizon R&D.
• Tougher conversations with VCs and family offices
  Investors will benchmark term sheets against after tax alternatives in other jurisdictions. That can translate into pressure for lower entry valuations or more aggressive investor protections.
• More scrutiny of exit options
  Routes that relied heavily on favourable CGT or EOT treatment will now need to be revisited, particularly in management incentive design and succession planning.
• Increased internal demand for non dilutive funding
  Boards will expect to see credible grant, loan and R&D tax components supporting major R&D programmes, both to soften the impact of higher equity costs and to validate strategic alignment with public priorities.

For multinational groups, there is an additional layer: global treasury teams will compare UK innovation returns with those in other markets, adjusting for these tax changes. If the UK cannot demonstrate a competitive blended cost of capital, projects may shift elsewhere.

How can grants and R&D tax relief rebalance your funding stack?

Grants, innovation loans and R&D tax relief cannot undo the Budget, but they can materially reduce the blended cost of capital for qualifying innovation. The point is not to “patch the hole” with a single scheme, but to design a deliberate funding architecture.

Recent HMRC statistics show that total R&D tax relief support in 2023–24 was still around £7.6 billion, tied to £46.1 billion of qualifying R&D expenditure, although support is down slightly and claim volumes have fallen sharply, particularly for SMEs.

The direction of travel is clear:

• Fewer, larger and more scrutinised claims
• A merged RDEC style regime capturing more companies
• Higher administrative burden, but still meaningful relief for well governed, evidence rich projects

For CFOs recalibrating hurdle rates, this matters because:

• A successful, compliant R&D claim can transform project economics when modelled over a multi year horizon
• Well structured grant and innovation loan funding reduces the amount of expensive equity required to reach commercial milestones
• Demonstrating that you have systematically explored non dilutive options improves the credibility of your case with investors who are themselves facing higher tax on gains and distributions

The practical implication is that funding design now sits alongside tax structuring and project appraisal as a core part of capital allocation.

How FI Group helps CFOs keep innovation capital competitive

FI Group works with CFOs, Heads of Tax and boards to redesign the funding stack around innovation, so that higher personal and capital taxes do not automatically translate into uncompetitive project economics.

In the UK and across our global network, that typically involves:

• Mapping your R&D pipeline against UKRI, Innovate UK and sector specific missions as well as European and international programmes
• Building a multi year funding roadmap that sequences grants, innovation loans and R&D credits alongside planned equity raises
• Quantifying the impact of different funding mixes on project IRR, payback period and group level cost of capital
• Strengthening governance around R&D tax and grants so that claims withstand increased HMRC scrutiny and investor due diligence

As Dr Fawzi Abou Chahine, Funding Director at FI Group UK, puts it:

“Most CFOs accept that the tax environment has hardened. The question they bring to us is whether their innovation portfolio still clears the hurdle rate once you overlay the grants, innovation loans and R&D incentives they could be accessing but are not yet using strategically.”

Because FI Group operates in multiple jurisdictions, we can align HQ strategy and local execution. Your head office sees the global innovation portfolio; your UK teams feel the local support on specific claims, competitions and funding applications. Global operations do not need global headaches.

FAQs: 2025 Budget and the cost of innovation capital

The final piece of the puzzle is helping boards and leadership teams turn these changes into concrete actions. These brief FAQs are designed for board packs and investment committees.

Does the 2025 Budget change the corporation tax rate for innovative companies?

No. The main corporation tax rate remains at 25 per cent. The pressure on innovation capital comes instead from higher taxes on dividends, savings, property income, capital gains and employee ownership exits, which reduce the net returns to founders, investors and key employees.

Will higher CGT and dividend taxes push investors away from UK scale ups?

They will not trigger an overnight exodus, but they do raise the bar. Investors will demand stronger fundamentals, clearer capital efficiency and, in many cases, evidence that companies have maximised grants and R&D relief before asking for larger equity cheques at higher valuations.

What should a CFO do in the next three months?

Priorities for most CFOs will include:

• Updating hurdle rates and valuation frameworks for major R&D projects
• Stress testing exit and incentive structures against the new tax rules
• Commissioning a funding strategy review to integrate grants, innovation loans and R&D relief into the capital plan
• Preparing a concise board briefing on the firm’s innovation funding exposure

What is the Multiannual Financial Framework 2028 to 2034?

The Multiannual Financial Framework (MFF) 2028 to 2034 is the European Union’s seven year budget plan, with a proposed envelope of around €1.98 trillion. It shifts the EU from crisis response to a proactive investment strategy, with at least 35 per cent of spending supporting climate and environmental objectives and a stronger focus on competitiveness and research.

For CFOs and R&D leaders, this is the reference framework that will shape EU funding calls, partnership models and reporting obligations from 2028 onwards.

 

How is the new MFF 2028 to 2034 structured?

The new MFF simplifies the EU budget architecture from seven headings to four main spending categories, making it easier to see where opportunities sit for innovation driven organisations.

The four spending categories

Heading	Budget (approx.)	Strategic focus
Economic, Social and Territorial Cohesion, Agriculture and Rural Prosperity, and Security	€1,062 billion	Cohesion policy, agriculture, fisheries, social policy, migration and security
Competitiveness, Prosperity and Security	€589 billion	Innovation, strategic industries, R&D&I, digital, defence and industrial policy
Global Europe	€215 billion	External action and cooperation with third countries
Administration	€117 billion	EU institutions and administrative expenditure

The second heading, Competitiveness, Prosperity and Security, is particularly important for corporate R&D and deep tech, since it is where the new European Competitiveness Fund (ECF) and an expanded Horizon Europe will sit.

 

 

Which EU funding programmes will be in place from 2028?

From 2028 the number of EU funding programmes will fall from 52 to 16 larger, more flexible instruments. The aim is to reduce fragmentation and make programmes more agile and results oriented, especially in R&D&I, defence, digitalisation, the green transition and health.

Allocation across the main programme families

According to the proposal, the EU budget will be broadly divided as follows:

• 44 per cent to National and Regional Partnership Plans (NRPPs)
• 21 per cent to the European Competitiveness Fund (ECF)
• 10 per cent to Global Europe
• 8 per cent to NextGenerationEU repayments, including Horizon Europe but excluding the Innovation Fund
• 2 per cent to Erasmus+ and AgoraEU
• 15 per cent to a group of smaller programmes such as the Connecting Europe Facility, Single Market and Customs Programme, Civil Protection and Health, EURATOM Research and Training and others

For beneficiaries, this means fewer labels on the surface but wider, more strategic envelopes underneath. The practical challenge for finance and innovation teams will be understanding how national and EU level instruments interact inside this simplified structure.

 

National and Regional Partnership Plans: more national discretion, more performance pressure

National and Regional Partnership Plans (NRPPs) will become a central vehicle for EU funding, particularly for cohesion, agriculture, social policy and climate investments. Each of the 27 Member States will prepare a tailored plan covering reforms, investments and other interventions, with minimum shares for climate and social spending.

Key design points include:

• At least 43 per cent of each plan’s budget must support climate and environmental targets
• At least 14 per cent must support social objectives
• The approach is less prescriptive on inputs but more demanding on results and performance
• Plans will emphasise multilevel governance, with regions and sectors involved in design and delivery
• Benefits are expected in the form of simplification, faster payments and lower administrative burdens

The allocation formula will continue to use core cohesion indicators such as GNI, regional GDP and safety nets, with bonuses for poorer regions, those bordering Russia and Belarus, and for agricultural and external convergence.

There is already political debate about whether NRPPs risk “renationalising” parts of the EU budget, which matters for companies planning cross border projects that rely on consistent rules.

For CFOs managing European footprints, the implication is clear:
you will need to track both EU level work programmes and Member State NRPPs, and align investment roadmaps with national priorities on climate, digital and social transition.

 

The European Competitiveness Fund: €451 billion for strategic technologies

Within the Competitiveness, Prosperity and Security heading, the proposed European Competitiveness Fund (ECF) will receive around €451 billion to scale up strategic technologies and bring innovations to market.

The ECF will focus on areas such as:

• Clean and renewable technologies
• Advanced semiconductors and artificial intelligence
• Biotech and health technologies
• Defence and dual use innovation
• Industrial decarbonisation
• Digital infrastructure

ECF breakdown

Indicative allocations within the ECF include:

• €175 billion for the Horizon Europe programme, covering early stage research and innovation
• €131 billion for resilience, security, defence industry and space
• €67 billion for clean transition and industrial decarbonisation, including €41 billion from the Innovation Fund
• €55 billion for digital leadership
• €23 billion for health and biotech, agriculture and bioeconomy

Funding instruments will mix grants, loans, equity and debt, together with procurement, business coaching and a broader financial toolbox that leverages private capital through mechanisms such as InvestEU, Important Projects of Common European Interest (IPCEIs) and the Innovation Fund.

For corporate R&D and deep tech, this is the core budget line that will support demonstration plants, scale up facilities, pilot lines and strategic infrastructures.

 

Horizon Europe 2028 to 2034: a nearly doubled research budget

The EU’s flagship programme for research and innovation, Horizon Europe, is maintained with a proposed budget of €175 billion, almost doubling its current envelope.

The four pillar structure will continue:

• Pillar I – Excellent Science
  • €44 billion for the European Research Council (ERC), MSCA and science for EU policies
• Pillar II – Competitiveness and Society
  • €76 billion for clusters on clean transition, industrial decarbonisation, health, biotech, agriculture, bioeconomy, digital leadership, resilience, security and defence, plus EU Missions and the New European Bauhaus facility
• Pillar III – Innovation
  • €39 billion for the European Innovation Council (EIC), innovation ecosystems and the knowledge triangle
• Pillar IV – European Research Area
  • €16 billion for ERA policies, research and technology infrastructures and widening participation

This confirms that collaborative R&I, missions and breakthrough innovation will remain central to the EU’s economic strategy, with a stronger connection to industrial deployment and strategic autonomy.

 

What does MFF 2028 to 2034 mean for CFOs and R&D leaders?

For finance leaders, the new MFF signals a long term policy direction rather than just a budget table. Over 2028 to 2034 you can expect:

• Stronger conditionality around climate and social outcomes, especially through NRPPs
• More competition for large, strategic calls in climate tech, defence, semiconductors and health
• A tighter integration of grants, loans and equity type instruments, blending public and private finance
• Ongoing scrutiny of results and performance, with payment and continuation more clearly tied to delivery

Against a backdrop of inflation, tight state aid rules and evolving R&D tax regimes, the MFF also adds another layer of complexity for groups operating across multiple Member States.

The real risk for CFOs is not only missing out on funding, but fragmented, reactive engagement that consumes internal time without building a coherent, multi year funding strategy.

 

How FI Group helps you navigate the new EU funding landscape

FI Group’s EU grants team specialises in turning complex frameworks like the MFF into actionable funding roadmaps for corporates, deep tech scale ups, universities and public sector organisations.

Our support typically includes:

• Strategic mapping of opportunities
  • Translating the four headings, ECF envelopes and Horizon Europe work programmes into a clear pipeline of calls relevant to your technology, assets and geographies
• Alignment with national NRPPs
  • Identifying where Member State Partnership Plans create additional windows for reforms and investments
  • Ensuring projects are structured to fit both EU and national funding logic
• Bid development and financial engineering
  • Building robust, investment grade project concepts that align with climate, digital and social indicators
  • Designing funding stacks that combine grants, loans and private co investment while respecting EU rules
• Project management, reporting and compliance
  • Setting up governance, cost tracking and reporting structures that stand up to audit
  • Minimising the administrative burden on internal teams and avoiding common pitfalls in eligibility and documentation

With offices across Europe, the UK, the United States and Latin America, FI Group combines global reach with local expertise, so your HQ sees the full picture while local entities receive detailed operational support.

“This proposal confirms that research, innovation and climate investment will sit at the very heart of the EU budget through 2034. The opportunity is significant, but it will favour organisations that plan early, understand the interaction between EU level programmes and national plans, and build a professional funding strategy rather than chasing calls one by one.” – Dr Giuseppe Amoroso, Senior R&D Funding Consultant, FI Group

 

Frequently asked questions about MFF 2028 to 2034

Many clients are already asking what the new framework means for their funding strategy. The answers below give a quick orientation.

When will the new MFF 2028 to 2034 come into force?

The proposal presented by the European Commission in July 2025 will be negotiated by Member States in the European Council, with consent from the European Parliament and, where required, national parliaments. The aim is adoption in 2027 and implementation from 2028 to 2034.

Who can benefit from funding under the new MFF?

A wide range of organisations will be eligible, including large corporates, SMEs, start ups, universities, research organisations, clusters and public authorities. Eligibility will depend on the specific programme and call. Many instruments under the ECF and Horizon Europe are geared towards collaborative projects and cross border consortia.

How does the climate focus affect funding eligibility?

At least 35 per cent of the EU budget will support climate and environmental objectives and NRPPs must dedicate at least 43 per cent of their budgets to climate and environment and 14 per cent to social targets.

This means projects that clearly contribute to decarbonisation, resilience, circularity and just transition will be strongly favoured across multiple headings.

What is the practical difference between the ECF and Horizon Europe?

Horizon Europe will remain the EU’s core research and innovation programme, spanning basic research to industrial deployment. The European Competitiveness Fund will sit more squarely on industrial deployment, scaling strategic technologies, infrastructure and security related capabilities. In practice many organisations will use both, sequencing early stage R&I with later stage deployment and scale up.

How should we prepare now, before 2028?

Practical steps include:

• Mapping your technology, assets and investment plans to the four headings and to likely ECF and Horizon Europe clusters
• Monitoring the design of your national NRPP and engaging in consultations where possible
• Building internal capability and external partnerships for cross border projects
• Establishing data and reporting systems that can support performance based funding

FI Group can support you in building this pre 2028 preparation plan, so you are ready to move quickly when the first calls under the new framework open.

 

Build your EU funding strategy for 2028 to 2034 with FI Group

The Multiannual Financial Framework 2028 to 2034 sets the direction for EU investment in climate, digital, health and strategic technologies for the next decade. The amounts are significant, but the real value lies in how well you align your strategy, portfolio and capital planning with this framework.

FI Group’s EU grants specialists can help you:

• Decode the implications of MFF 2028 to 2034 for your organisation
• Build a multi year pipeline across Horizon Europe, the ECF and national NRPPs
• Design and deliver competitive proposals that withstand financial and technical scrutiny
• Integrate EU funding with your wider capital stack and R&D tax positions

To explore what this means for your organisation, contact the FI Group EU grants team today or visit our European grants advisory and Horizon Europe funding support pages for more detail.

Singapore as the strategic R&D bridge from the UK into Asia

For UK headquartered groups, Singapore is the most efficient launchpad into Asia for innovation intensive activities. It combines a stable legal system, strong IP protection, generous R&D and innovation incentives, and deep links with the UK, allowing CFOs to anchor regional R&D in one jurisdiction while coordinating group strategy from London. Our on the ground team at FI Group Singapore works in lockstep with FI Group UK to design and deliver these cross border funding strategies.

What makes Singapore attractive for UK R&D intensive groups?

Singapore is attractive to UK groups because it offers a predictable business environment, a top ranked innovation ecosystem, robust IP protection and direct government support for R&D and advanced manufacturing, all within a compact, highly connected city state that serves the wider ASEAN region.

Gateway to ASEAN with UK aligned policy

Singapore sits at the heart of ASEAN, with excellent air, sea and digital connectivity into a fast growing market of more than 600 million people. ASEAN’s combined R&D investments have increased more than fivefold over the past two decades, signalling a long term commitment to innovation in the region.

The 2023 UK–Singapore Strategic Partnership explicitly makes research, science, innovation and technology one of five core pillars of the bilateral relationship, alongside economic and green economy cooperation. This political alignment gives UK boards confidence that innovation links will remain a long term priority.

Mature innovation ecosystem and clusters

Singapore has deliberately built out innovation districts and clusters such as one north and the Jurong Innovation District, combining universities, research institutes, corporates and manufacturing facilities in dense ecosystems. These hubs support activities from early research to testing, manufacturing and distribution in a single geography.

For UK groups this reduces coordination friction: R&D, pilot manufacturing, digital operations and commercial teams can be co located, while regional sales and service activities remain within a short distance.

Strong IP and regulatory frameworks

Singapore ranks among the world leaders on innovation and is recognised for strong legal frameworks that underpin IP transactions and technology licensing. Recent analysis highlights Singapore’s position in the global top five for innovation and its role in driving IP led, AI and SaaS licensing across ASEAN.

For a UK HQ that cares about safeguarding group IP, Singapore offers reliable enforcement, English language documentation and regulatory regimes that are familiar to common law trained counsel.

Talent, universities and industry partners

With universities such as NUS and NTU acting as anchors, Singapore’s innovation hubs host both research talent and industry scale partners in advanced manufacturing, electronics, biomedical sciences, mobility and digital technology. Jurong Innovation District alone is projected to support tens of thousands of high value jobs in advanced manufacturing.

For UK multinationals, this means that the same location can provide both a pipeline of skilled engineers and a supply chain of sophisticated manufacturing and technology partners.

How do Singapore’s R&D and innovation incentives work for UK groups?

Singapore’s Enterprise Innovation Scheme and enhanced R&D deductions provide generous support for companies conducting qualifying R&D and innovation activities in Singapore, with elevated deduction rates from YA 2024 to YA 2028 and the option to convert part of the benefit into a cash payout.

Enterprise Innovation Scheme

Under the Enterprise Innovation Scheme (EIS), eligible businesses can claim up to 400 percent tax deduction on specified categories of qualifying expenditure, including R&D, innovation and capability development, during the basis periods for YA 2024 to YA 2028. In some cases, businesses can opt to convert part of the qualifying spend into a non taxable cash payout.

For a UK headquartered group, this makes Singapore an attractive location to host regional R&D teams, prototype facilities and digital development centres, especially where the activity is closely linked to Asian customers.

Baseline R&D super deductions

Beyond EIS, Singapore already offered enhanced deductions on qualifying R&D spend. External benchmarking notes that, for smaller tranches of R&D expenditure, the combined effect of super deductions and headline tax rates can produce an effective after tax benefit that is highly competitive against other leading regimes.

The combination of stable policy, clear eligibility rules and proactive guidance from the tax authority allows CFOs to plan multi year R&D programmes with reasonable confidence.

Alignment with UK R&D policy

The UK has moved to a more streamlined R&D expenditure credit regime, while Singapore has introduced EIS in parallel. Together, these developments create an environment where UK groups can design portfolios that leverage both regimes, rather than having to choose one or the other. The key is careful cost allocation and transfer pricing between UK and Singapore entities.

How does the UK–Singapore innovation partnership support UK companies?

The UK and Singapore support corporate R&D collaboration through a Strategic Partnership, a Digital Economy Agreement and recurring joint R&D calls co funded by Innovate UK and Enterprise Singapore, allowing UK firms to develop solutions with Singapore partners for both regional and global markets.

Joint R&D calls

The UK–Singapore Collaborative R&D Call series invests up to £5 million per competition from the UK side, matched by Enterprise Singapore for Singapore participants. Projects must be business led, involve at least one company in each country and seek to develop innovative products, services or processes with strong market potential in Singapore, the UK or internationally.

These calls are particularly relevant for UK groups that want to co develop solutions with Singapore customers or partners in sectors such as net zero, advanced manufacturing, healthtech and digital.

Digital trade and data flows

The UK–Singapore Digital Economy Agreement reduces friction around digital trade, data flows and fintech, which is critical when R&D involves cloud based platforms, data intensive services or cross border testing. For CTOs and CIOs working alongside CFOs, this simplifies the design of digital R&D projects that run simultaneously in both markets.

Key sectors where UK groups are using Singapore as an R&D base

Singapore is especially attractive as an R&D hub for UK groups in advanced manufacturing, life sciences, fintech and digital services, AI and cybersecurity, and net zero technologies linked to regional industrial bases.

Advanced manufacturing and industrial technologies

With Jurong Innovation District and related initiatives, Singapore has positioned itself as a hub for advanced manufacturing, including precision engineering, electronics and smart factory solutions. UK industrial and engineering groups can prototype, test and scale manufacturing in Singapore, then extend supply chains into ASEAN.

Life sciences and medtech

Singapore’s investments in biomedical sciences, coupled with strong healthcare infrastructure and regulatory standards, make it an attractive base for clinical research, diagnostic technologies and medtech devices aimed at Asian markets. For UK life sciences firms, this offers both patient access and collaboration opportunities with regional hospitals and institutes.

Fintech, digital and AI

Singapore is a well established financial centre with a proactive regulatory environment for fintech and digital assets. Combined with the Digital Economy Agreement and national AI strategies, this makes it a natural location for UK financial and technology groups to run Asia focussed digital R&D, data science and AI licensing programmes.

The CFO lens: why Singapore is an R&D hub, not just a sales office

For CFOs of UK headquartered multinationals, Singapore’s value lies in its ability to reduce complexity and risk in Asia while consolidating innovation activity in a single, well governed jurisdiction.

Common pain points in global R&D portfolios include regulatory complexity, cross border compliance hurdles, fragmented claims processes, audit risk and misaligned local strategies. Singapore helps address these by offering consistent rules, clear guidance on R&D and innovation incentives, and agencies that are used to dealing with global groups.

CFOs can use Singapore to:

• Anchor Asian R&D and IP in a jurisdiction with strong legal and tax frameworks
• Consolidate regional innovation spend for better forecasting and cash flow planning
• Simplify governance by concentrating R&D heavy entities in a single location rather than multiple smaller markets

However, this only works if the UK and Singapore R&D and grant positions are designed together, rather than in isolation.

How should UK CFOs structure R&D across the UK and Singapore?

UK CFOs should treat Singapore as a complementary R&D hub that works in tandem with the UK, using coherent project structures, cost allocation and governance, so that both regimes can be leveraged without double counting or unnecessary audit risk.

A practical operating model typically includes:

• Role clarity: UK entities lead core research and group level innovation strategy, while Singapore entities focus on regional adaptation, pilot deployment and co development with Asian customers.
• Planned cost allocation: Intercompany agreements define which entity bears which R&D costs, how staff and subcontracting are recharged, and how grants and incentives are factored into pricing.
• Integrated funding design: Grant applications to Innovate UK and Enterprise Singapore are planned together, with early modelling of UK and Singapore R&D tax outcomes.
• Single documentation playbook: Technical and financial documentation is prepared in a way that can be adapted for both HMRC and the Singapore tax authority, with consistent narratives and project boundaries.

This reduces the chances of misaligned positions, which are increasingly visible to tax authorities that share information and understand multinational operating models.

 

How FI Group helps UK groups build Singapore as their Asian R&D hub

FI Group is a specialist advisory firm in R&D tax incentives, grants and innovation funding, with global reach and strong local expertise in both the UK and key international regimes that UK groups use, including Singapore.

For UK headquartered clients using Singapore as an R&D hub, FI Group typically:

• Maps the global R&D incentives landscape across the UK, Singapore and other relevant jurisdictions, highlighting interactions between regimes and cross border risks
• Designs a single methodology for identifying, documenting and claiming R&D that local finance teams in both countries can apply consistently
• Structures and supports applications to UK–Singapore collaborative calls, ensuring technical and commercial narratives are coherent on both sides and funding structures complement, rather than erode, tax relief
• Provides audit defence and enquiry support where HMRC or the Singapore authorities challenge R&D claims or grant interactions

With more than 1,400 professionals worldwide and over 15,000 clients supported each year, FI Group brings a scale and depth of experience that few local providers can match. Global reach. Local expertise. Your HQ sees the full picture. Your teams feel the local support.

“Global operations do not need global headaches. When UK and Singapore teams work from one R&D funding playbook, CFOs gain cleaner numbers, lower risk and faster time from idea to funded project.”
Dr Fawzi Abou Chahine, Funding Director, FI Group UK

We turn complexity into clarity, fast.

Use internal links such as R&D tax relief advisory, international R&D incentives benchmarking and UK grants and loans support to connect this page directly into FI Group’s core UK services and international pages.

 

FAQs: Singapore as an Asian R&D hub for UK headquartered groups

Before the detailed questions, it is important to note that every group’s structure and risk profile is different. The answers below are indicative and should be refined through tailored advice.

Is it possible to use both UK and Singapore R&D incentives on related projects?

Yes. A UK entity can claim UK R&D relief on qualifying expenditure it incurs, while a Singapore entity can claim Singapore incentives on its own qualifying costs. The key is to avoid double claiming in either jurisdiction and to align transfer pricing with real substance and intercompany agreements.

How do UK–Singapore Collaborative R&D Calls work in practice for UK groups?

Innovate UK funds UK registered organisations, and Enterprise Singapore funds Singapore companies under a mirrored call. UK and Singapore partners submit aligned applications to their respective agencies, which jointly assess the overall project. No grant funding is transferred between agencies, which simplifies subsidy control and state aid considerations for CFOs.

Why choose Singapore rather than another Asian hub for R&D?

Singapore combines political stability, a strong rule of law, high quality infrastructure, top tier universities, competitive innovation incentives and a deep financial centre, all in an English speaking environment. For UK boards and audit committees this combination makes Singapore easier to govern and explain than many alternatives, while still giving access to wider ASEAN markets.

What are the main risks a CFO should watch when using Singapore as an R&D hub?

The primary risks are inconsistent positions between UK and Singapore tax filings, poorly structured intercompany agreements, under documented technical narratives and a lack of alignment between local and group level innovation strategies. These are manageable risks, but they require deliberate design rather than leaving local teams to improvise.

When is the right time to engage FI Group?

The optimal moment is before the first significant cross border R&D project or joint call application goes in. Early engagement allows FI Group to shape project structures, cost allocation, documentation and grant strategy. In practice, many groups arrive mid programme, and a key part of our work is to retrofit structure without undermining compliance or losing value.

 

UK SMEs can access net zero research and innovation finance through a mix of competitive grants, demonstration and pilot funding, green lending and loans, and co investment programmes that crowd in private capital. These sit alongside R&D tax incentives and local place based schemes that together form a complete funding stack for decarbonisation projects. Find out about our Grants Roadmapping service.

What UK net zero research and innovation finance is available for SMEs?

For UK SMEs, net zero finance now spans:

• National R&I grant portfolios focused on power, industry, hydrogen, buildings, transport, CCUS and natural resources
• Demonstration and pilot funds to take technologies from lab to first commercial deployment
• Green finance innovation schemes, such as programmes that support lenders to test green mortgages and home improvement loans
• Blended and co funded models where government money is used to de risk private investment
• Local and regional funds aligned to place based net zero plans
• R&D tax relief and capital allowances, which improve after tax returns on innovation and capital projects

From an FI Group perspective, the opportunity for a CFO is to design a financing strategy that combines these elements, rather than chasing one off grants in isolation. That is the only way to finance multi year net zero roadmaps at scale.

Why net zero finance is now a board level issue for SMEs

Net zero finance has moved from policy rhetoric to a hard set of cost, risk and competitiveness questions for CFOs.

For many SMEs, decarbonisation requires:

• Significant capital expenditure on new plant, electrification, heat pumps or process change
• Longer payback periods, especially where energy price volatility or policy risk is high
• Technology and delivery risk, particularly at early TRL stages or in hard to abate sectors
• Complex, overlapping incentives across grants, loans, tax reliefs and local schemes

CFOs are judged on cash, risk and return, not slogans. Our own work with finance leaders shows recurring pain points around:

• Fragmented funding, often managed project by project rather than against a clear net zero roadmap
• Uncertainty on which instruments apply at each stage of the innovation cycle
• Limited internal bandwidth to track schemes, eligibility and compliance in real time

The UK Net Zero Research and Innovation Framework recognises that public finance must de risk private investment, particularly for SMEs that cannot absorb full technology and policy risk on their own. The progress report from 2022 to 2025 shows a maturing ecosystem of instruments that increasingly reflects this reality.

Public grant funding for net zero innovation

What role do grants play in SME net zero finance?

Grants remain the core mechanism for early and mid stage net zero innovation, where technical and commercial risk is highest. For SMEs, they provide non dilutive support to develop, test and demonstrate technologies that would not proceed on a purely commercial basis.

The Framework progress report highlights a broad portfolio of grant based programmes that support:

• Discovery research and applied R&D in universities, Catapults and businesses
• Demonstration projects that move technologies up the TRL scale
• System level pilots that integrate technologies in real world settings

The main pillars that SMEs can plug into include:

UKRI and Innovate UK net zero programmes

Across UKRI and Innovate UK, SMEs can access calls aligned with priority net zero themes such as:

• Power and flexibility
• Low carbon hydrogen supply and use
• Industrial fuel switching and process innovation
• Buildings and heat
• Sustainable transport and batteries
• Carbon capture, usage and storage
• Bioenergy and nature based solutions

Within these, calls often ring fence participation for SMEs or consortia where SMEs lead or play a central role. Grants typically cover:

• Feasibility and proof of concept studies
• Industrial research
• Experimental development
• First of a kind demonstrators

For a CFO, the key is to sequence grant participation with your commercial roadmap, not simply apply opportunistically. That requires a view of upcoming calls and how they map to your technology and capex plans.

The Net Zero Innovation Portfolio and demonstration funding

The government’s Net Zero Innovation Portfolio brings together multiple programmes that are explicitly designed to de risk technologies for private investors by funding pilots and demonstrations. These include, for example:

• Long duration energy storage and flexibility projects
• Low carbon hydrogen production, storage and industrial use
• Industrial fuel switching demonstrators
• Advanced nuclear development and associated supply chains
• Local energy system demonstrations and smart local energy systems

The progress report shows that these programmes are already:

• Increasing technology readiness levels across portfolios
• Supporting thousands of jobs in net zero supply chains
• Generating patents and intellectual property
• Leveraging private co investment alongside public funding

For SMEs, participation in these programmes provides more than cash. It offers validation, partnerships and data, all of which matter when raising follow on finance.

Loans, green lending and new finance products

What loan and green finance options are emerging from the Framework?

The Framework is explicit that grants alone are not enough. The system must also develop commercial finance products that support net zero investment at scale, particularly in buildings and infrastructure.

The progress report highlights, for example:

• The Green Home Finance Accelerator, which supports lenders to design and test green finance products, such as green mortgages and home improvement loans, that reward energy efficiency upgrades in homes
• Work on the green lending market, aimed at improving access to capital for net zero investments and demonstrating viable business models for lenders

While these programmes primarily operate through financial institutions, they matter for SMEs because they:

• Influence the availability and pricing of green loans for commercial property, fleets and equipment
• Help standardise what “green” looks like from a risk and underwriting perspective
• Create templates that can be extended to SME portfolios, for example energy efficient business premises or clean technology leasing

CFOs should not view these as abstract policy trials. They are early signals of how mainstream banking products will evolve, and early adopters will be better placed to secure favourable terms as products scale.

Blended and co investment models

How does public funding crowd in private capital for net zero?

A recurring theme in the Framework is the need to blend public and private finance so that taxpayers de risk, rather than replace, market capital.

In practice, this takes several forms:

• Match funded grants, where SMEs or consortia contribute a percentage of project costs alongside government
• Co investment with industry, particularly in large demonstrations in hydrogen, CCUS and industrial decarbonisation, where private partners commit significant capital once technical risk is lowered
• Portfolios designed to leverage private funding, with programmes reporting private sector funding secured or expected as a result of public investment

For SMEs, blended models can:

• Reduce the equity or debt required for high risk stages
• Improve the terms offered by investors, who see public backing as a signal
• Open doors to larger industrial or infrastructure partners

From an FI Group standpoint, the crucial discipline is to treat co funding as part of capital structure planning. That means sizing internal and external contributions, understanding state aid and subsidy control limits, and modelling the impact on cash flow and valuation.

Place based and local net zero funds

What regional and local finance options exist?

The progress report emphasises that many net zero challenges are inherently place based. Heat networks, local energy systems and industrial clusters require local coordination and tailored finance.

As a result, SMEs increasingly see opportunities through:

• Local energy system demonstrators and smart local energy systems programmes, which fund pilots integrating renewables, storage, flexibility and digital platforms in specific localities
• Regional industrial decarbonisation initiatives, where clusters of manufacturers access shared infrastructure, advice and finance channels
• Partnerships with local authorities and combined authorities, which may offer their own funds, guarantees or procurement pipelines linked to national net zero programmes

These schemes matter for SMEs that are:

• Embedded in local supply chains
• Providing hardware, software or services to cluster projects
• Developing solutions that can be replicated across multiple localities

For a CFO, the funding challenge is to join up local and national instruments, rather than treat them as separate worlds. FI Group’s role is often to map the intersections, for example where a local demonstrator can unlock eligibility for national calls or vice versa.

Complementary tax incentives and regulatory levers

How do R&D tax incentives and capital allowances support net zero finance?

Alongside grants and finance programmes, the UK system still relies heavily on tax incentives to support innovation and capital investment. For SMEs pursuing net zero projects, this includes:

• R&D tax relief under the merged RDEC style scheme, which supports qualifying scientific and technological work within net zero projects
• Enhanced support for R&D intensive companies, which can be particularly relevant to climate technology businesses investing a high proportion of spend in innovation
• Capital allowances, including full expensing or special rate reliefs, which improve the economics of plant and machinery investments linked to decarbonisation

Used properly, these instruments can:

• Increase the effective internal rate of return on a net zero project
• Release cash that can be recycled into further capex or R&D
• De risk equity and debt by improving post tax cash flows

FI Group already supports thousands of clients globally with R&D tax credit optimisation and capital allowance reviews, ensuring that climate related projects are fully captured rather than treated as routine expenditure.

For UK SMEs, combining R&D tax relief advisory services with strategic grant support is often the difference between a stalled pilot and a funded roadmap.

How FI Group helps SMEs build a net zero funding stack

What does a strategic partner add beyond basic grant writing?

Most SMEs do not lack ideas. They lack time, bandwidth and certainty. FI Group’s role is to act as a single point of contact for net zero research and innovation finance, bringing together:

• Grant and innovation funding strategy, aligned with your sector, technology roadmap and net zero commitments
• R&D tax relief optimisation, ensuring every qualifying activity is identified and evidenced
• International funding coverage, where cross border projects can access European or global schemes through our offices in over 15 countries
• Governance, compliance and audit readiness, critical as regimes tighten and scrutiny increases

We bridge the gap between HQ strategy and local execution. Your leadership team sees the full funding picture. Your project teams feel hands on support with applications, documentation and claims. Global operations do not need global headaches.

“Net zero finance is no longer a single scheme decision. It is a portfolio question. The most resilient SMEs are those that combine grants, tax incentives and private capital across a multi year roadmap. Our job is to bring clarity to that picture and help clients move faster with less risk.” – Dr Fawzi Abou Chahine, Funding Director, FI Group UK

If you are planning or already delivering net zero projects, our Grants Roadmapping service can help you prioritise opportunities, sequence applications and align internal resources, so you are not reacting to deadlines but executing a funding strategy.

 

FAQs: net zero research and innovation finance for SMEs

Before diving into specific programmes, it is worth addressing some of the questions we hear most often from SME CFOs and leadership teams.

What is the difference between net zero research funding and net zero deployment funding?

Net zero research funding supports the development and demonstration of new technologies and business models. It typically covers feasibility, R&D and pilots. Deployment funding focuses on rolling out proven solutions at scale, for example upgrading large building portfolios or industrial sites. The UK Framework is primarily about research and innovation, but many programmes deliberately bridge into early deployment.

Can an SME combine grants with equity or venture capital?

Yes. In many cases, grants are explicitly designed to crowd in equity and venture funding, not to replace it. Investors often value public funding as a signal of technical quality and policy alignment, provided state aid and subsidy control rules are managed correctly. The key is to structure grants and equity rounds so that they complement each other rather than create conflicts around IP, milestones or reporting.

Are net zero grants only for technology companies?

No. While climate tech SMEs are important beneficiaries, many programmes also support:

• Industrial SMEs improving their own processes
• Service providers developing digital or advisory solutions
• Construction and engineering firms delivering demonstrators
• Supply chain companies building components, materials or software

What matters is the innovation and net zero impact, not simply whether you sell technology as a product.

How early or late stage can projects be and still qualify?

The Framework portfolios span the full innovation chain, from low TRL discovery research to high TRL first of a kind demonstrators. Many SME relevant calls sit in the TRL 4 to 8 range, where concepts are proven, prototypes are built and systems are trialled in operational environments. Beyond that, deployment tends to rely more heavily on commercial finance, sometimes supported by separate capital grant schemes.

How do we avoid overloading the finance team with multiple funding streams?

This is a genuine risk. Without coordination, you end up with fragmented reporting, overlapping audits and inconsistent assumptions. The solution is to treat funding as a managed portfolio:

• Map all live and potential schemes
• Align them with your project pipeline and reporting cycles
• Standardise evidence and documentation wherever possible
• Use a single internal owner or external partner to orchestrate the process

This is exactly where FI Group’s global innovation funding practice adds value.

What is the first practical step if we have not applied for net zero funding before?

The most effective first step is a focused portfolio review:

1. Identify your current and planned net zero projects
2. Assess which qualify for R&D tax relief under current rules
3. Map them against relevant grant and demonstration schemes
4. Prioritise one or two high potential opportunities and move quickly on those

Trying to chase every call at once almost always leads to diluted effort and weak submissions.