Autumn Budget 2025: A steady Budget delivering stability for innovators

For the second Budget in a row, no news means good news for R&D-active businesses. Despite the flurry of speculation that accompanied the late Budget and the Chancellor’s unusual step of a pre-Budget announcement at the beginning of the month, once again no major changes were announced to the scheme.

For SMEs investing in technology, manufacturing or sustainability, this Budget offers something valuable: continuity.

Key measures affecting innovative SMEs

R&D tax relief and public investment

• No amendments were made to the merged R&D scheme or Enhanced R&D Intensive Support. After several years of reform, this stability will be welcome news.
• Public R&D budgets remain protected: £20.4bn for 2025/26, rising to £22.6bn by 2029/30.
• Higher dividend tax rates may prompt some businesses to view reinvestment, supported by R&D tax relief, as more attractive than distributing profits.

The government will pilot a targeted Advance Assurance service for SMEs from spring 2026, although it’s not yet clear how eligibility or selection will work. A renewed focus on Advance Assurance is reflective of the changing regulatory environment. The Government also announced that it will also publish a summary of responses to the Advance Assurance consultation, signalling potential changes to this service in the future.

Investment in science, technology and manufacturing

The government reiterated its priority sectors (advanced manufacturing, clean energy, creative industries, defence, digital and technology, financial services, life sciences, and professional and business services), with funding aligned to the Modern Industrial Strategy.

Highlights include:

• DRIVE35 funding increased by £1.5bn, bringing the total to £4bn to support zero-emission vehicle manufacturing, battery systems, supply-chain resilience and automotive R&D.
• Targeted regional investments:
  • Advanced manufacturing upgrades in Northern Ireland
  • AI capability development in Wales

These investments signal ongoing support for high-productivity sectors across the UK.

Business taxation and incentives

• No changes were announced to Corporation Tax, marginal relief, full expensing, the Annual Investment Allowance, or the Patent Box.
• The continued alignment with the Corporation Tax Roadmap provides SMEs with a more predictable foundation for planning capital investment and long-term innovation activity.

Grants and public funding programmes

• Beyond automotive, there were no major new grant schemes announced. Previously announced support for CLIMATES (critical minerals ) and SHORE (marine) were highlighted.
• Most new funding for 2025/26 will flow through ongoing Innovate UK and UKRI programmes, where competition remains high.

Kene’s view on the 2025 Budget

Across our Consulting, Compliance and Grants teams, there’s a shared perspective: this Budget is defined by stability, not disruption.

• Consulting insight: Clear continuity in R&D tax relief gives you the confidence to plan multi-year innovation programmes with greater confidence.
• Grants insight: DRIVE35 is the standout opportunity for the automotive and clean mobility sector. If you operate in the EV supply chains and are innovating in zero emissions technologies, batteries, advanced materials, or mobility software, expect to see multiple grant funding competitions to support your R&D!
• Compliance insight: HMRC scrutiny remains strong, so clear documentation, robust technical narratives and accurate eligibility assessments are essential.

What SMEs should do next

With stable funding and clear priorities, you may want to:

• Review their 12 to 24 month R&D roadmap, particularly projects previously delayed due to uncertainty.
• Revisit borderline or paused projects, especially where reinvestment may now be more efficient than distributing profits.
• Assess potential alignment with DRIVE35, especially if they operate in EV supply chains, energy storage, clean mobility or advanced manufacturing.
• Track upcoming Innovate UK, UKRI and devolved nation funding calls across clean energy, life sciences, agritech and circular economy innovation.
• Strengthen compliance processes to ensure claims remain robust and audit-ready.

Speak to our team

If you want to understand how the Autumn Budget 2025 affects your innovation plans or funding strategy, we’re here to help.

Get in touch to explore your position and make informed decisions about R&D relief, grants and Patent Box.