Autumn Budget 2026: What It Means for Innovative UK Businesses

What did the Budget mean for innovation?

John Healey's first Budget as Chancellor put a clear emphasis on cutting red tape around R&D tax relief, and on helping ambitious companies raise money and grow in the UK.

For founders, engineers and developers, the announcements that matter most fall into four areas: R&D tax relief, innovation grants, founder taxes and access to growth capital.

1. R&D tax relief: less admin, same rates

The claim notification form is going

The government will remove the requirement to submit a claim notification form for R&D claims made on or after 1 April 2027. It estimates this will benefit around 26,000 businesses a year.

At present, companies claiming R&D tax relief for the first time, or that have not claimed in the previous three years, must tell HMRC they intend to claim within six months of the end of their period of account. Miss the deadline and the claim is invalid.

We have seen too many businesses lose a whole year of relief because they did not know about the form or were badly advised. Its removal is very welcome news.

The official wording refers to when a claim is made, not when the accounting period ended. Read that way, some companies with periods that have already ended could benefit, provided their claim is made on or after 1 April 2027. HMRC's detailed guidance should confirm this, and we will update this article when it is published.

The additional information form will be simplified

The additional information form (AIF), which every R&D claimant must submit, will be simplified and rationalised from autumn 2027, benefiting around 40,000 businesses a year. The details are still to come. The government has also said it will consider integrating the existing forms as part of a wider redesign of the claims process, although that work is at an early stage.

Rates are unchanged

The rates of R&D tax relief under the merged scheme and Enhanced R&D Intensive Support (ERIS) stay the same.

A chance to shape the R&D rules

Alongside the Budget, the government published Corporate Tax Simplification for Business Investment, which seeks views on simplifying several areas of the R&D legislation:

• Whether the definitions of "total expenditure" and "connected" companies in the ERIS intensity ratio are unclear or complex to apply.
• Whether the exemption from the PAYE and National Insurance cap applies where it should.
• Whether companies are losing going concern status for technical reasons while they still have a viable trade.

Businesses wanting to join the working groups and forums need to register their interest by emailing ct.simplification@hmrc.gov.uk by 21 November 2026. If any of those rules have affected your business, this is a rare chance to say so.

What should you do now?

Keep watching the six-month claim notification deadline until the change takes effect. Do not assume the form has already gone.

Simpler admin also does not change what a claim needs to show. Companies still have to demonstrate a qualifying advance in science or technology, and keep technical and financial records that will stand up to scrutiny.

2. Innovation grants: more focus on commercial technology

The government is directing more public funding towards commercially promising innovation in UK industry.

The headline is £1 billion over the next four years for priority innovation clusters across the country, aligned with the Industrial Strategy sectors. The detail of how it will be allocated is still being worked out.

There is a greater emphasis on commercialisation, regional innovation and helping emerging technologies get to market. That direction is encouraging for businesses developing advanced technology in sectors such as life sciences, AI, engineering and renewable energy.

There is a catch. The Budget also confirmed a further 1% cut to departmental capital budgets from 2027–28 to 2029–30, to raise £3 billion. Research Agenda estimates the combined capital cuts could leave the science and technology department with around £1 billion less to spend over four years. So more money is being targeted at priority areas while the overall pot is under pressure. Competition for grants outside those areas is likely to get tougher.

What should you do? Review your innovation roadmap now and identify projects that fit government priorities. Waiting for a competition to open and then shaping a project around it rarely produces a strong application.

3. Founders' Relief, with a catch

The Budget introduces a new Founders' Relief for qualifying disposals on or after 6 April 2027. It offers a 10% Capital Gains Tax rate, compared with the usual 18% and 24% rates, on up to £10 million of lifetime gains.

The eligibility rules are demanding. Under the proposals, the founder must have held at least 25% of the company's ordinary shares when it started trading, held the shares for at least five tax years, and been UK resident for at least five tax years. The company must have turnover of at least £10 million and at least 15 full-time equivalent employees in the year before the sale, and meet two of three growth tests on turnover, employees or R&D spending. Some sectors, including financial services, land and property development, are excluded. A technical consultation on the details closes on 30 November 2026.

At the same time, the lifetime limit for Business Asset Disposal Relief is being halved, from £1 million to £500,000, for disposals on or after 6 April 2027. The government says three-quarters of claimants will still get relief on their entire gain. For the rest, typically owners selling larger businesses that do not qualify for Founders' Relief, the tax bill on exit will go up.

4. Access to investment: who really benefits?

The pull of deeper, more liquid capital markets in the US remains a real issue for UK founders. Several Budget measures aim to make it easier to raise money and grow here, each with a caveat.

EIS, SEIS and VCT

The government will make technical improvements to make the EIS and VCT schemes simpler to use, and fix minor technical issues with SEIS. No investment limits changed in this Budget, so the £250,000 SEIS fundraising limit stays the same. EIS and VCT company limits were already doubled from 6 April 2026 following the previous Budget.

The British Business Bank

The British Business Bank's total financial capacity rises by a fifth, to £30.6 billion. This includes £1.4 billion of additional capacity to invest in equity funds and £450 million for a new venture debt product, which lets growing businesses borrow without giving up more equity. The government also plans to invest £5 billion in growth-stage funds and scale-ups.

The catch is that most of this money will be distributed through investment funds and lending partners. Early-stage businesses without established revenue or investor backing may still find it hard to reach.

Employee share options: EMI2

The Company Share Option Plan (CSOP) will be rebranded as EMI2. From April 2027, the individual option limit doubles from £60,000 to £120,000, and the £250,000 combined limit across EMI and CSOP options is being removed. That gives growing businesses more room to attract and keep skilled people with share options.

Scale UK

Scale UK will offer a single access point for government support for high-growth businesses. A Scale UK Connect pilot, led by London & Partners with regional partners, will give 200 high-growth firms expert advice, introductions to investors and international opportunities. It is welcome support. Its focus on businesses already growing quickly does raise the question of how much will reach earlier-stage innovative companies.

What should innovative businesses do next?

The Budget reinforces the case for a joined-up approach to funding innovation. R&D tax relief returns part of the cost of qualifying development. Grants support ambitious technical projects. Equity and venture debt provide the capital to commercialise and grow. Each does a different job, and they work best together.

For businesses investing in new technology, now is a good time to:

• Check whether a claim notification deadline falls before April 2027.
• Review existing R&D claims and records.
• Look at upcoming grant opportunities that fit government priorities.
• Consider how public funding can sit alongside private investment.
• Register interest in the R&D simplification working groups by 21 November if the ERIS or PAYE cap rules affect you.

Key takeaways

• The R&D claim notification form will be removed for claims made on or after 1 April 2027. Until then, the six-month deadline still applies.
• The additional information form will be simplified from autumn 2027.
• R&D tax relief rates under the merged scheme and ERIS are unchanged.
• Businesses can register interest in shaping simpler R&D rules, including the ERIS intensity test and PAYE cap, by 21 November 2026.
• £1 billion over four years will go to priority innovation clusters, but departmental capital budgets face a further 1% cut.
• Founders' Relief offers 10% Capital Gains Tax on up to £10 million of gains from April 2027, with strict eligibility, while Business Asset Disposal Relief is halved to £500,000.
• The British Business Bank's capacity rises to £30.6 billion, including a new £450 million venture debt product.

Frequently asked questions

Is the R&D claim notification form being abolished?

Yes. The government will remove the requirement to submit a claim notification form for R&D claims made on or after 1 April 2027. Until then, first-time and lapsed claimants must still notify HMRC within six months of the end of their period of account.

Did the Autumn Budget 2026 change R&D tax relief rates?

No. Rates under the merged R&D scheme and Enhanced R&D Intensive Support are unchanged.

What innovation funding was announced in the Autumn Budget 2026?

The Budget commits £1 billion over the next four years to priority innovation clusters across the UK, aligned with the government's Industrial Strategy sectors, with a greater emphasis on commercialisation and regional innovation.

What is Founders' Relief?

Founders' Relief is a new Capital Gains Tax relief giving a 10% rate on up to £10 million of lifetime gains, for qualifying disposals on or after 6 April 2027. It is aimed at founders of larger, high-growth companies, with strict conditions on shareholding, company size and growth.

What is EMI2?

EMI2 is the new name for the Company Share Option Plan (CSOP). From April 2027, the individual option limit doubles from £60,000 to £120,000.

What happened to Business Asset Disposal Relief?

The lifetime limit for Business Asset Disposal Relief is being halved from £1 million to £500,000 for disposals on or after 6 April 2027. The government says three-quarters of claimants will still receive relief on their entire gain.