Startup Funding in the UK for Building an MVP

For an early-stage UK founder, the schemes worth knowing are Innovate UK grants and loans, the SEIS and EIS investor tax reliefs, the government-backed Start Up Loan, and R&D tax relief. Today, the ones that can realistically pay for an MVP build are money raised under SEIS or EIS and a Start Up Loan of up to £25,000. Innovate UK's open-to-anyone Smart grants are closed, Innovation Loans are paused until January 2027, and the Innovate UK competitions open now are themed calls that rarely fit a typical product MVP.

This page is about the money. For London price levels, VAT on an invoice from abroad, UK GDPR and how we work with UK clients, read MVP development for UK founders. This is orientation, not financial, tax or legal advice: check your plans with an accountant or adviser before you commit money.

Scheme details checked against official sources on 20 October 2026. Schemes change; confirm with the programme before applying.

At a glance

Innovate UK: what is actually open

Smart grants: closed

Smart grants were the open, any-sector Innovate UK competition many founders still search for. Innovate UK's own guidance page now says: "Smart grants are now closed for new applications as funding is being aligned to Innovate UK's new strategic direction." We found no successor that is open to any sector today. Treat any guide that tells you to "apply for a Smart grant" as out of date.

The 2025 pilot that came closest for very early companies, Growth Catalyst Early Stage: New Innovators, offered grants of £25,000 to £50,000 to UK micro and small businesses in five critical technology areas. It closed on 6 August 2025. It is worth reading as a picture of how Innovate UK words its rules for small first-time applicants, but it is not open.

The competitions open now

On 20 October 2026 the Innovation Funding Service listed 31 competitions. All of them are themed: battery materials, engineering biology, agriculture, medicines manufacturing, cancer diagnostics, defence, energy networks, AI research, and collaborations with partners in Germany, Japan or Singapore. None is an open grant for any software product.

Two show what a live call for a single UK SME looks like:

• Frontier AI: SME Champions, Phase 1 closes on 11 November 2026. Projects have total eligible costs of £150,000 to £250,000 over one to three months, with grant of up to 70% for micro or small organisations. AI or machine learning must be the core technical contribution, starting at Technology Readiness Level 1 to 3, in one of four themes. This is feasibility research, not a product MVP.
• Efficient, Structured and Controllable AI Systems closes on 18 November 2026 and funds experimental validation of prototype AI systems. Again, a research project.

If your MVP is a marketplace, booking tool or SaaS product built with standard technology, none of the open calls is likely to fit. If your product is genuinely research in one of these themes, read the competition's own scope and eligibility pages in full; each call sets its own rules.

Common reasons applications fail. The general guidance we opened does not list them. Competition pages do make some things ineligible outright: for example, the Frontier AI call allows only one application per SME and states that further applications from the same organisation are made ineligible.

Innovation Loans: paused

Innovate UK's Innovation Loans are for UK registered micro, small and medium enterprises carrying out a project from or in the UK. Loans run from £100,000 to £5 million, covering up to 100% of eligible project costs. Interest is 3.7% a year on drawn amounts during the project, plus a further 3.7% deferred, then 7.4% on the outstanding balance in repayment, with an overall term of no more than seven years. The page says: "Applications for Innovation Loans will pause from 11am 9th October 2026 until January 2027." The last round is closed. Even when it reopens, the minimum is well above a typical MVP budget.

Innovate UK Business Growth: paused for new requests

Innovate UK Business Growth gives innovative SMEs one-to-one support from growth specialists. It is advice, not money for a build. Its FAQ page says the service continues for existing and committed clients, and "New requests into the service, outside of the above, have been paused as part of the current planning cycle." No restart date is given.

SEIS and EIS: the most common way an MVP gets funded

Neither scheme gives your company money. They give your investors tax relief, which makes it easier for you to raise a first round, and you spend that round on your product. Most UK MVPs funded from outside the founder's own pocket are funded this way.

SEIS

HMRC's SEIS guidance sets these conditions:

• Amount. "You can receive a maximum of £250,000 through Seed Enterprise Investment Scheme."
• The company. Established in the UK; no more than £350,000 of gross assets and fewer than 25 full-time-equivalent employees when the shares are issued; a qualifying trade that has not been carried on for more than three years.
• How the money is spent. "The money raised by the new share issue must be spent within 3 years of the share issue", on a qualifying trade, preparing to carry one out, or research and development expected to lead to one. It cannot be used to buy shares, except in a qualifying 90% subsidiary.
• Compliance statement. The company can submit it once it has carried out the qualifying trade for at least four months, or spent at least 70% of the money raised.
• Advance assurance. You can ask HMRC whether a share issue is likely to qualify before you go ahead.
• Risk to capital. The investment must be a genuine risk to investors' capital. HMRC lists the factors it looks at, including the company's "sources of income", "structure" and "use of subcontractors".

For investors, HMRC's relief guidance gives 50% income tax relief on up to £200,000 a year, with the shares held for at least three years.

EIS

For a company past the seed stage, HMRC's EIS guidance says most companies can raise up to £10 million in any 12-month period and £24 million in their lifetime. The company must have a permanent establishment in the UK, fewer than 250 full-time-equivalent employees when the shares are issued, gross assets of no more than £30 million before the issue and £35 million immediately after, and be within seven years of its first commercial sale (knowledge-intensive companies have different rules). The money must be spent within two years of the investment, or of the date trading started if later, on a qualifying business activity, and must not be used to buy all or part of another business. Investors get 30% income tax relief on up to £1 million a year. The compliance statement can be submitted once the company has carried out its qualifying business activity for four months.

Start Up Loans

The government-backed Start Up Loan is the simplest public money for a solo founder. GOV.UK states:

• Amount and rate: "£500 to £25,000" at "a fixed interest rate of 7.5% per year", repaid "over a period of 1 to 5 years". It lists no application or early repayment fees.
• Who: you must live in the UK, be at least 18, and have or plan a UK-based business that has "been fully trading for less than 5 years". You need to pass a credit check.
• What kind of loan: an unsecured personal loan, not a business loan. You owe it, not your company.
• Use: "to start or grow your business".
• Support: "successful applicants get up to 12 months of free mentoring."

At the top of the range, £25,000 can cover a small MVP, or a Scoping Sprint and a first build stage. We could not open the Start Up Loans website or the British Business Bank's pages on 20 October 2026 (both refused automated access), so this section relies on GOV.UK only. Read the lender's current terms before you apply.

R&D tax relief: merged scheme and ERIS

R&D tax relief pays back part of what you spent on qualifying R&D, after the event, through your company tax return. It does not fund a build up front.

• Merged scheme. HMRC's guidance says: "The rate of R&D expenditure credit under the merged RDEC scheme is 20%." The company must be trading, chargeable to Corporation Tax, and have a project that meets the definition of R&D.
• ERIS. For "a loss-making R&D intensive SME", meaning relevant R&D spending of at least 30% of total spending, ERIS allows a total deduction of 186% and a payable credit "worth up to 14.5% of the surrenderable loss".
• Telling HMRC. First-time claimants, and companies whose last claim was more than three years earlier, must submit a claim notification within six months of the end of the period of account. If you miss it, "your R&D tax relief claim will be invalid."
• Is your MVP R&D at all? HMRC's guidelines on the meaning of R&D say R&D "takes place when a project seeks to achieve an advance in science or technology". Work can be "completely new to the company" and still not count, and "Uncertainties that can readily be resolved by a competent professional working in the field" are not technological uncertainties. A typical MVP that tests a market with established frameworks often does not qualify.

Can this money pay an outside development team, or one in another country?

This is where UK schemes differ most. Easify is a Budapest team, our engineering is in India, and our invoices are in euros from our registered entity in India. Here is what each scheme's official rules say about a supplier like us.

Innovate UK grants: only if the call allows it, with a UK justification

Innovate UK's costs guidance for non-academic organisations allows subcontract costs for work that is "essential to the success of your project", involves "expertise that does not exist within the project team", and involves "skills that it is not practical to develop in-house". You should name the subcontractor, describe the work and say where it will be done. On location it says: "Where subcontractors are non-UK based, please justify why you are unable to use a UK alternative."

Individual competitions go further:

• The Growth Catalyst Early Stage call (now closed) allowed overseas subcontractors only with a detailed rationale and evidence of the UK contractors approached, and stated that lower cost alone is not a sufficient reason. Project work had to be carried out in the UK.
• The open Frontier AI: SME Champions call says: "Subcontractors are not allowed in this competition." Work must be carried out in the UK and most funding spent there.

In practice, a grant-funded project that hands the core build to a team in India, chosen because it costs less, is unlikely to meet these rules. If a call allows subcontractors and you have a real reason a UK supplier cannot do the work, ask Innovate UK through the contact details on the competition page before the competition closes.

Innovation Loans: work must be in the UK

The Innovation Loans page requires the project to be carried out "from or in the UK" and gives no separate subcontracting rules. The official guidance does not say whether an overseas development team is allowed; ask Innovate UK before you commit, once the loans reopen.

SEIS and EIS: no rule on where the money is spent

The SEIS and EIS guidance pages require the company to be established, or have a permanent establishment, in the UK, and the money to be spent on a qualifying business activity within the time limit. Neither page sets a rule about where that money is spent or which suppliers it pays. Paying an agency abroad to build the product the company trades with is, on the face of the guidance, spending on the qualifying trade.

One caution: HMRC lists "use of subcontractors" among the factors in the risk to capital test. A company that outsources its product build is common, but a company that is little more than a wrapper around contracts may draw questions. The official guidance does not say more; ask your adviser, and HMRC through advance assurance, before you commit.

Start Up Loans: the official guidance does not say

GOV.UK says the loan is "to start or grow your business" and that the business must be UK-based. It does not say whether the money can pay a supplier outside the UK. The official guidance does not say; ask the Start Up Loans Company or your delivery partner before you commit, and show the build cost in your business plan.

R&D tax relief: overseas contractor costs are excluded

This one is explicit. HMRC's manual says contractor payments "for R&D undertaken overseas only is excluded from qualifying expenditure", unless section 1138A of the Corporation Tax Act 2009 applies (CIRD150500). That exception needs conditions necessary for the R&D that are not present in the UK, are present where the work is done, and would be wholly unreasonable to replicate in the UK: geographical, environmental or social conditions, or legal or regulatory requirements. Section 1138A states that conditions do not include anything relating to the cost of the R&D or the availability of workers. The restriction applies to accounting periods beginning on or after 1 April 2024.

For Easify: our engineering is in India, and a cheaper rate or available developers are exactly the reasons the law excludes. If your build is genuine R&D and you plan to claim relief on the contractor's work, assume our part of it will not qualify, and ask your adviser before you choose a supplier. Even for UK contractors, HMRC's manual says 65% of the relevant portion of an unconnected contractor payment is claimable (CIRD138000). If your MVP is not R&D for tax purposes, the restriction changes nothing.

How to plan your MVP budget around it

1. Pick the money first, then the supplier. If your plan depends on an Innovate UK grant or an R&D relief claim, the supplier's location can decide whether the costs count. If it depends on SEIS, EIS, a Start Up Loan or your own savings, the official rules we read do not tie you to a UK supplier.
2. Do not spend before the rules allow it. SEIS and EIS money is spent after the shares are issued, and advance assurance comes before the issue. Innovate UK projects run between set start and end dates in each competition. Check the timing rule for your scheme before you sign or pay anything.
3. Get a written scope and a fixed price. Investors, lenders and grant assessors all ask what the money buys. A written scope with a fixed price and timeline makes the plan easy to show and the spending easy to evidence later. Our MVP Scoping Sprint produces that: €900 fixed, about two weeks, credited in full against the build if you build with us. It is general good practice; no UK scheme asks for our document specifically, and we do not write funding applications.
4. Plan for the currency. Easify's MVPs typically cost €5,000 to €25,000 over four to twelve weeks, invoiced in euros. A Start Up Loan or SEIS round is in pounds, so leave headroom for exchange-rate movement between quote and payment.
5. Keep the records. SEIS and EIS compliance statements, and any R&D claim, rest on evidence of what was spent and when. Keep the scope, invoices and payment records together.

Client products we build are hosted in EU data-centre regions; UK data rules for that are covered on the UK MVP page. If you are comparing countries, see the European MVP funding hub, EU-wide funding for startups, and our guides for Ireland and Germany. For price mechanics, read how much an MVP costs in Europe, and if you are choosing a supplier, how to choose an MVP development agency.

Schemes we left out

• Smart grants and Growth Catalyst Early Stage: closed, as above.
• Knowledge Transfer Partnerships, Investor Partnerships and the bilateral R&D calls: open, but led by an academic partner, tied to selected investors in specific sectors, or requiring an overseas partner. They do not fund a typical MVP build.
• Innovation Loans and Innovate UK Business Growth: paused, as above.

If your round, loan or own budget is in place and you want a fixed price for the build, send us what you want to test, who it is for and your deadline, or book the MVP Scoping Sprint, and we reply within one business day.