Funding your software or AI project in the UK: what is actually available in 2026.

Most UK funding for software is tax relief after the event, a loan, equity or a narrowly defined competition. Very little is a general grant for hiring a developer. Here is what exists, checked against the official pages.

Tax relief

• R&D tax relief. A 20 per cent taxable expenditure credit under the merged scheme, or ERIS for loss-making R&D-intensive SMEs, for genuine R&D only. Routine builds rarely qualify. See our guide to R&D relief when you use an agency.
• Capital allowances. The Annual Investment Allowance is £1 million a year, full expensing is permanent for companies and a new 40 per cent first-year allowance has applied since 1 January 2026. How software and websites are treated depends on whether the spend is capital or revenue and, for companies, on the intangible fixed assets rules, so ask your accountant (HMRC CA23410 and BIM35815).

Grants and programmes

• Innovate UK. Smart grants are closed for new applications while Innovate UK aligns its funding to a new strategy (UKRI). Current competitions are specific: an AI systems competition for research-intensive SMEs closes on 18 November 2026, and the BridgeAI Deployment Catalyst opens on 21 October 2026. Both bar subcontractors, so neither can pay an agency to build for you.
• Made Smarter Adoption. Match-funded grants of up to £20,000 towards digital technology projects in most English regions, for SME manufacturers and engineering firms, plus advice and funded digital internships. It is not available in Scotland, Wales or Northern Ireland.
• Help to Grow: Management. A 12-week management course with one-to-one mentoring for firms with 5 to 249 staff. It is 90 per cent government-funded and costs £750 per participant.
• Scotland. The National AI Adoption Programme for SMEs, run by The Data Lab with Scottish Enterprise and Business Gateway, offers fully funded support until 31 March 2027. SMART: SCOTLAND is closed, with a new fund expected later in autumn 2026.
• Wales. Business Wales is developing an AI adoption programme, and the Flexible Skills Programme pays 75 per cent of accredited AI training costs.
• Northern Ireland. Invest NI's Groundwork for Growth, launched on 12 October 2026, offers up to £15,000 for product development, marketing and market development to firms that are not yet Invest NI clients.
• Business Growth Service. The government's front door to business support, at business.gov.uk, signposts what is available. It does not fund projects directly.

Loans

• Start Up Loans. £500 to £25,000 at a fixed 7.5 per cent over one to five years, with up to 12 months of free mentoring, for businesses trading for less than five years.
• Growth Guarantee Scheme. Lenders get a 70 per cent government guarantee on facilities of up to £2 million for SMEs, but the borrower stays fully liable for the debt.
• Nations and Regions Investment Funds. The British Business Bank's funds provide loans and equity to smaller businesses outside London, through fund managers in each area.

Equity

• SEIS. A qualifying company can raise up to £250,000, and investors get 50 per cent income tax relief. Conditions include gross assets of £350,000 or less and a trade under three years old.
• EIS. From 6 April 2026, a qualifying company can raise up to £10 million a year, or £20 million if it is knowledge-intensive, and investors get 30 per cent income tax relief.
• Cash only. SEIS and EIS shares must be paid for in cash, so shares given in exchange for services, such as to a development agency, attract no relief. HMRC's advance assurance tells you whether an issue is likely to qualify.

What is changing soon

• The Budget on 28 October 2026 may change tax reliefs and allowances.
• Making Tax Digital for Income Tax extends to sole traders and landlords with qualifying income over £30,000 from April 2027 and over £20,000 from April 2028.
• E-invoicing becomes mandatory for VAT invoices from 2029, with an implementation roadmap promised at the Budget.

Where we fit

We do not arrange funding, and we never promise that a project will qualify for any scheme. What we do is scope work so it fits the route you choose: a discovery you can show a lender or a programme, technical records an R&D adviser can use and, for a few founders a year, the Co-Founder Programme as an equity-based alternative to paying in cash.