Main Innovate UK Schemes for Software Companies
This guide covers the main Innovate UK funding routes relevant to UK software development companies as of June 2025. Innovate UK funding schemes change frequently — always check the Innovate UK website and Innovate UK EDGE for current competitions.
| Scheme | Description | Grant Amount | Eligibility | Timeline |
|---|---|---|---|---|
| Smart Grant (Feasibility) | Technical feasibility study for an innovative software concept | Up to £50,000 (70% grant) | UK SMEs, sole traders | 3–6 months project |
| Smart Grant (Industrial Research) | Collaborative or solo R&D to develop innovative software | £50K–£2M (60–70% grant) | UK SMEs and universities | 6–24 months project |
| KTP (Knowledge Transfer Partnership) | Academic + business collaboration embedding a recent graduate (Associate) in your company | Up to 67% of Associate cost (~£35K/yr) | UK businesses of any size | 12–36 month programme |
| SBRI (Phase 1) | Government challenge — build a prototype solving a public sector problem | Up to £100,000 (100% grant) | UK SMEs | 3–6 months feasibility |
| SBRI (Phase 2) | Develop SBRI Phase 1 prototype to functional demonstrator | Up to £1,000,000 (70% grant) | Phase 1 winners only | 12–24 months |
| Accelerating AI | AI-specific strand of Smart Grants for AI-first innovations | £50K–£500K (70% grant) | UK SMEs in AI | 6–18 months |
What Makes a Strong Innovate UK Software Application?
Insufficient novelty: "we are building a better version of existing software" is not innovation — "we are solving a technical problem that current software cannot solve" is.
No addressable market evidence: revenue projections without market size evidence are dismissed.
Unclear UK benefit: Innovate UK requires UK economic benefit — where will the jobs be created?
Budget not justified: every cost item must be justified with rates and time — not just totals.
Poor technical description: assessors include technical experts — vague technology descriptions fail.
Innovate UK assessors score applications on: innovation level (must be genuinely novel — not state of the art), commercial viability (credible route to market), technical feasibility (realistic plan), and team capability (right people to deliver). Common reasons for rejection:
Knowledge Transfer Partnerships (KTPs) — The Hidden Gem
| KTP Component | Detail |
|---|---|
| Innovate UK grant | 67% of Associate salary, overheads, and training costs (SMEs: up to 67%, large companies: up to 50%) |
| Associate profile | Recent graduate (MSc/PhD) — jointly supervised by company and university academic |
| University partner | Provides research expertise, supervision, and academic network. Must be UK university. |
| Project scope | Company-defined innovation project — typically 18 months. Associate integrates into your team. |
| IP ownership | Company owns all IP developed during KTP |
| R&D Tax Credits | KTP costs may qualify for R&D Tax Credits — double benefit from Innovate UK + HMRC |
SBRI — Building Software for Government
NHS England SBRI: health technology challenges — wearables, AI diagnostics, patient engagement.
HMRC SBRI: tax compliance technology, fraud detection, Making Tax Digital.
DWP SBRI: benefits administration, fraud detection, accessibility tools.
SBRI (Small Business Research Initiative) is the UK government's mechanism for buying innovative R&D to solve public sector challenges. Phases 1 and 2 are 100% and 70% funded respectively — the government is paying you to develop software that solves their problem. NHS, HMRC, DWP, DVLA, and MoD regularly issue SBRI competitions for software solutions.