Startup funding in the UK: grants, loans, SEIS and equity

By GrantSnap team · Published 2026-11-05 · guide

Startup funding in the UK comes through six main routes: government-backed Start Up Loans, tax-advantaged angel investment under the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS), Innovate UK grants for innovation projects, R&D tax relief, accelerators, and venture capital. Which one fits depends mostly on two things: how far along your company is, and whether you are willing to give up equity.

Below are the terms each official page states as of 5 November 2026. Loans and grants leave your shareholding untouched. SEIS, EIS and venture capital mean selling shares. R&D tax relief is a claim on money already spent. Confirm each figure on the official page before you rely on it.

Startup funding in the UK by stage

Before launch or early in trading, the routes that need no track record are a Start Up Loan, which is open to people planning a business as well as those trading for under five years, and a first angel round under SEIS, which is built for companies whose trade is less than three years old. If your product involves real technical uncertainty, an Innovate UK competition can pay part of the cost of a defined project.

Once you are raising larger rounds, EIS takes over from SEIS and remains available until seven years after your first commercial sale. R&D tax relief sits alongside every stage for companies that pay Corporation Tax and spend money on qualifying research.

Start Up Loans: £500 to £25,000 with mentoring

The gov.uk Start Up Loans page describes a government-backed loan of £500 to £25,000 at a fixed interest rate of 7.5% a year, repaid over 1 to 5 years. There is no application fee and no fee for repaying early. It is an unsecured personal loan rather than a business loan, so you borrow as an individual and you must pass a credit check.

To qualify you must be 18 or over, live in the UK, and have, or plan to start, a UK-based business that has been fully trading for less than five years. Applicants get free help writing a business plan, and successful applicants receive up to 12 months of free mentoring.

SEIS and EIS for angel rounds

HMRC's guidance on using SEIS says the company must be established in the UK, have gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued, and carry on a new qualifying trade that has not run for more than three years. A company can raise a maximum of £250,000 through SEIS, and the money must be spent within three years of the share issue.

EIS is for larger rounds. Under HMRC's guidance updated on 6 April 2026, the company must have gross assets of no more than £30 million before the share issue and £35 million immediately after, fewer than 250 full-time equivalent employees, and raise within seven years of its first commercial sale. It can raise up to £10 million in any 12 month period and £24 million over its lifetime. Knowledge-intensive companies have separate, higher limits, and some Northern Ireland companies in goods or wholesale electricity trades have lower ones.

Angels care about the tax relief. HMRC's investor guidance gives SEIS investors Income Tax relief of 50% of the amount invested, on up to £200,000 a tax year, and EIS investors 30%, on up to £1 million a year, or £2 million if at least £1 million goes into knowledge-intensive companies. Shares must be held for at least three years to keep the reliefs.

Before a round you can ask HMRC for advance assurance, its view on whether a planned share issue is likely to qualify. It is optional and needs a separate application for each proposed investment. After the shares are issued, you file a compliance statement, form SEIS1 or EIS1. For SEIS this can only be sent once you have traded for at least four months or spent at least 70% of the money raised. HMRC then issues the certificates investors use to claim.

Innovate UK grants for innovation projects

Innovate UK funds projects through competitions, each with its own eligibility and scope. Projects are largely business-led and every application goes through the Innovation Funding Service. Most competitions close at 11:00am UK time. A business grant covers a share of eligible project costs set in each competition. The Battery Innovation feasibility studies round, for example, pays up to 70% for micro or small organisations, 60% for medium and 50% for large, and you fund the rest.

Independent assessors score each application, five, three or one of them depending on the competition, and applications are ranked by average score. Innovate UK may then take a portfolio approach, which can mean a lower-scoring project is funded to balance the spread. There is no appeal. Our separate guides to startup grants in the United Kingdom and to Innovate UK funding go into the detail.

Open now in the GrantSnap catalog as of 5 November 2026 are Frontier AI: SME Champions, Phase 1 (deadline 11 November 2026), Commercialising Knowledge Assets Fund (CKAF) winter (1 December 2026), Battery Innovation: Feasibility Studies Rd 3 (2 December 2026), UK-Singapore CRD 2026 (16 December 2026) and Knowledge Transfer Partnership: 2026 to 2027 round 4 (27 January 2027), all run by Innovate UK.

R&D tax relief after the merger

For accounting periods beginning on or after 1 April 2024, the old SME and RDEC schemes were replaced by a merged R&D expenditure credit scheme and enhanced R&D intensive support (ERIS). HMRC states that the merged scheme credit is 20% of qualifying expenditure. ERIS is only for loss-making SMEs that are R&D intensive, meaning relevant R&D spending is at least 30% of total expenditure. It gives an extra 86% deduction, 186% in total, and a payable credit worth up to 14.5% of the surrenderable loss.

Timing catches first-time claimants. HMRC's manual says a company that has not made an R&D claim in the previous three years must pre-notify HMRC within six months of the end of the period of account, or the claim is barred. The same page, updated on 29 October 2026, says that for claims made on or after 1 April 2027 companies will no longer need to pre-notify. You also complete an additional information form when you claim.

Accelerators and venture capital

Venture capital means selling shares in return for larger sums. Accelerator terms vary, so read each programme's own deal page before you apply. We list UK programmes in our guide to accelerators in the United Kingdom, and compare accelerators with grants and fellowships in a separate guide.

The government also backs venture capital through the British Business Bank. A gov.uk announcement on 7 August 2026 described the next £100 million phase of the bank's Investor Pathways Capital Initiative, which will invest £400 million in total in first-time venture capital fund managers who provide early capital to new businesses. For a founder, that money arrives as an investment from one of those funds.

How to combine routes

The official pages give a few firm sequencing rules. HMRC says you will not qualify for SEIS if you have already had investment through EIS or a Venture Capital Trust, so a SEIS round has to come before any EIS round.

Innovate UK runs at least one competition that requires a grant and equity together. Its Investor Partnerships competition for the Battery Innovation Programme, open as of 5 November 2026 until 25 November 2026, funds SMEs only when a named investor partner leads aligned investment through new shares or convertible debt. That investment must be at least equal to the grant for feasibility studies and industrial research, and at least twice the grant for experimental development.

On pairing a grant with SEIS or EIS, or a grant with R&D tax relief, the pages we checked say nothing either way. If you plan to use both, mention the grant in your advance assurance application, and ask HMRC or a tax adviser how grant-funded costs affect an R&D claim before you file.

What lenders, investors and assessors ask for

For a Start Up Loan you need a credit check and a business plan, with free help to write it. For advance assurance HMRC asks for the amount you plan to raise, your business plan and financial forecasts, latest accounts if you have them, your articles of association, your register of members and the draft documents you will show investors. That pack is worth preparing for angels too.

Innovate UK assessors score written answers. The Battery Innovation feasibility competition scores need or challenge, approach and innovation, team and resources, market awareness, commercialisation roadmap and risk management, project management, project risks, equality, diversity and inclusion, added value, costs and value for money, and wider impacts. Partners whose eligible project costs exceed £50,000 must provide an independent accountant's report.

Next, match the route to your stage: check SEIS eligibility and request advance assurance if you plan an angel round, look on the Innovation Funding Service for a competition in your scope, and put the R&D notification window in your diary.

GrantSnap tracks live calls like these Innovate UK competitions, drafts answers from your company profile and fills the form in Chrome, and you review every answer before submitting.

Common questions

Can I get startup funding in the UK before I start trading?

Yes. A Start Up Loan of £500 to £25,000 is open to people planning to start a UK business as well as those trading for less than five years. SEIS is also designed for companies with a new trade less than three years old.

How much can a startup raise under SEIS?

HMRC's guidance says a company can raise a maximum of £250,000 through SEIS. It must have gross assets of no more than £350,000 and fewer than 25 full-time equivalent employees when the shares are issued.

Do Innovate UK grants cover all project costs?

Not for businesses. Each competition sets the share of eligible costs it pays. The Battery Innovation feasibility studies round, for example, pays up to 70% for micro or small organisations, so you fund the rest.

Is a Start Up Loan a business loan?

No. The gov.uk page describes it as an unsecured personal loan at a fixed 7.5% a year, repaid over 1 to 5 years, and you must pass a credit check.

Can a loss-making startup get cash from R&D tax relief?

If relevant R&D spending is at least 30% of total expenditure, a loss-making SME can claim under ERIS, which includes a payable credit worth up to 14.5% of the surrenderable loss. Other companies claim the merged scheme credit of 20% of qualifying expenditure.

Sources

Start Up Loans (accessed 2026-11-05)
Apply to use the Seed Enterprise Investment Scheme to raise money for your company (accessed 2026-11-05)
Apply to use the Enterprise Investment Scheme to raise money for your company (accessed 2026-11-05)
Use a venture capital scheme to raise money for your company (accessed 2026-11-05)
Tax relief for investors using venture capital schemes (accessed 2026-11-05)
Apply for advance assurance on a venture capital scheme (accessed 2026-11-05)
Research and Development (R&D) tax relief: the merged R&D expenditure credit scheme and enhanced R&D intensive support (accessed 2026-11-05)
CIRD183000: R&D Tax Reliefs: reformed reliefs: claims process: pre-notification of claims (accessed 2026-11-05)
Innovate UK funding rules (accessed 2026-11-05)
Innovate UK: before you start an application (accessed 2026-11-05)
Innovate UK: what happens after you have submitted your application (accessed 2026-11-05)
Battery Innovation: Feasibility Studies Rd 3, Innovation Funding Service (accessed 2026-11-05)
Investor Partnerships: Battery Innovation Programme, Innovation Funding Service (accessed 2026-11-05)
Venture capital access expanded for early-stage companies in UK (accessed 2026-11-05)

We checked gov.uk, HMRC, UKRI and Innovation Funding Service pages on Start Up Loans, SEIS, EIS, advance assurance, investor reliefs, the merged R&D scheme and claim notification, Innovate UK applicant guidance, two live competitions and the British Business Bank's Investor Pathways Capital Initiative on 5 November 2026; open listings come from the GrantSnap catalog as of 2026-11-05.

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