Autumn Budget 2026: Simpler R&D claims and a stronger focus on scale-up

‍Budget 2026 brings planned changes to R&D claim administration, targeted investment in innovation clusters, and more support for taking technology into commercial use.

For innovative businesses, the opportunity extends beyond grants. Understanding whether support comes through tax relief, a development contract, investment or borrowing will be essential to making the right decisions.

Last year, our Budget response focused on continuity. With no major changes to the R&D tax schemes, stability was welcome after several years of reform.

This year, there is more to consider. The government is proposing to remove an administrative barrier to R&D claims while strengthening selected routes from research into commercialisation and growth. Our view is that this is a more active Budget for innovation, but not a general increase in grant funding for every business.

Key measures affecting innovative businesses

R&D tax relief: simpler administration from 2027

The most directly relevant announcement for R&D claimants is the planned removal of the Claim Notification Form from 1 April 2027, followed by simplification of the Additional Information Form from autumn 2027. The notification change will be introduced through Finance Bill 2026-27, with the Additional Information Form changes made through secondary legislation.

This is a welcome direction. Under the current rules, businesses required to notify HMRC can lose access to relief if they miss the notification deadline. Removing that separate step should reduce the risk of an otherwise eligible claim being prevented by an administrative omission.

However, these are future changes. Do not remove existing notification or filing deadlines from your calendar on the strength of the announcement. Continue meeting the current requirements and check the transition rules when they are published. The Budget does not establish that previously missed notification deadlines will be disregarded.

The announcement concerns administration rather than higher relief rates. Nor should a simpler form be read as a relaxation of the eligibility test. Your claim still needs a clear explanation of the scientific or technological advance, the uncertainties involved and the qualifying expenditure.

Regional clusters and strategic industries receive targeted backing

UK Research and Innovation will focus £1 billion of investment over four years on priority innovation clusters aligned with the Industrial Strategy. The Budget also sets out plans to devolve Local Innovation Partnerships Fund settlements to Established Mayoral Authorities from 2028. This is a commitment about where investment is concentrated, not confirmation of an additional £1 billion available through an open SME grant competition.

Life sciences and aerospace also feature prominently. Three public-private life sciences investments involving Convatec, Vertex Pharmaceuticals and Kindeva total more than £1 billion, supported by almost £70 million in government grants. Separately, the government has announced plans for a joint, 10-year, £2.5 billion programme with Rolls-Royce for next-generation gas turbine technologies. The aerospace agreement has not been contracted and remains subject to negotiations, award and legal processes.

For smaller businesses, the practical question is where these investments could create relevant collaborations, access to facilities or supply-chain opportunities. A major investment in your sector is worth understanding, but it is not the same as funding being available directly to your company.

Public procurement becomes a more important route to commercial use

Some of the most relevant announcements concern government buying or commissioning innovation, rather than simply funding its development.

These are different forms of support, with different delivery mechanisms. The Budget sets out the commitments, but businesses will need the relevant competition or procurement documents to establish eligibility, application dates and contractual requirements.

We see particular value in the emphasis on public-sector adoption. For a business developing a technology around a defined healthcare, security or infrastructure problem, a development contract could offer a clearer connection between technical work and a potential customer.

The important distinction is that winning support to develop or demonstrate a solution does not automatically secure a long-term commercial contract.

More scale-up finance, not simply a larger grant pot

The British Business Bank will receive £5 billion of additional financial capacity. The package includes £1.4 billion for equity funds backing high-growth businesses and £450 million for a new venture debt product for innovative firms. These amounts sit within the wider package and should not be added to it as separate funding uplifts.

The Sovereign AI Fund will also expand its direct investment activity by £60 million between 2027/28 and 2029/30, including a new focus on physical and industrial AI. Meanwhile, the National Wealth Fund and British Business Bank are committed to deploying up to £5 billion of investment and lending over four years into defence, dual-use technologies and other national-security-related sectors.

These measures could matter to businesses moving beyond technical development into manufacturing, deployment or international growth. But investment and borrowing are not interchangeable with grant funding.

Our advice is to assess the terms against your next stage of development. Consider ownership implications, repayment obligations, cash flow and the time needed to reach dependable revenues. A larger pool of finance is useful only where the finance is suitable for the business taking it on.

Clean technology faces a more mixed funding picture

The Budget provides £2 billion for an Energy Wealth Fund within the National Wealth Fund, supporting renewable and low-carbon energy infrastructure. However, it also reprioritises existing spending, identifying savings of £200 million in capital grants for carbon capture, usage and storage and £500 million for hydrogen. The government is exploring greater use of loans, equity and private investment for projects in development.

These are changes to deployment and infrastructure support, not a blanket statement about all clean-tech R&D funding. Nevertheless, businesses developing capital-intensive technologies should pay close attention to the changing balance between grants and repayable or investment-based support.

For eligible manufacturers in Great Britain, the British Industrial Competitiveness Scheme is intended to reduce electricity bills by up to 25% from April 2027. That is operating-cost support rather than an R&D grant, but it may be relevant when assessing the economics of testing, production and scale-up.

Kene’s view: the test is whether support connects development to deployment

We welcome the proposed reduction in R&D administration and the stronger emphasis on commercialisation. The combination of regional investment, procurement and growth finance suggests a more deliberate attempt to support what happens after an idea has shown technical promise.

However, headline funding totals are not the most useful starting point for an individual business. The better question is: what must your project achieve next, and which funding route could realistically help you achieve it?

For example, a company developing a new industrial sensor should separate the cost of proving the technology from the cost of demonstrating it with a customer and financing its first production line. Those are different milestones, with different risks and funding needs.

The Budget’s success should be judged on whether businesses can move between those stages without losing momentum. More investment capacity and simpler forms are positive, but the delivery terms, timing and accessibility will determine their practical value.

What you should do next

• Keep your current R&D claim timetable intact. Maintain notification deadlines, technical records and cost evidence while the 2027 changes are developed.
• Review your next 12 to 24 months of innovation activity. Separate technical development, customer validation and commercial rollout, then identify the funding gap at each stage.
• Assess opportunities by their terms, not their headline value. Check sector and regional fit, eligible costs, match funding, payment timing, intellectual property provisions and any repayment obligations before committing resources.

An announced programme belongs on your opportunity list. It should not be treated as secured project income before the relevant application, investment or contracting process is complete.

Speak to our team

Talk to us about your next stage of R&D and the funding gap you need to address. We can help you assess realistic R&D tax relief and grant options, understand how they fit your wider plans, and build the evidence needed to support your claim or application.

Get in touch to discuss your innovation funding plans.