Published: November 26, 2025 at 9:59 am
The Budget is a pivotal moment for the UK to show it is serious about restoring confidence in its innovation economy.
The changes that HMRC have made to the R&D scheme in recent years have rightly strengthened its integrity but have also resulted in a 26% reduction in claim volumes. However, the fact that UK venture funding surpassed £4.5 billion in Q3 2025, the strongest quarter since 2022 tells a contrasting story.
This year’s budget must connect these trends in a way that restores confidence in the scheme’s use, while appropriately rewarding the ambition that fuels the economy.There are five priority actions that would make a material difference for UK innovators:
Lowering the ERIS threshold to 20% so it reflects real-world R&D spend and doesn’t exclude legitimate claims.
Moving R&D credit rates toward international parity to ensure the UK remains competitive as an innovation hub.
Implementing a clear, digital-first Advance Assurance process that meaningfully reduces enquiry risk for SMEs and scaling businesses.
Making full expensing permanent for both tangible and intangible assets to support long-term investment.
Modernising EMI and simplifying investment schemes to help high-growth companies attract talent and unlock capital.
Announcements like the new £1 million bioengineering sandbox fund show the government recognises the need to fuel breakthrough sectors, yet the R&D scheme offers a way to get full value from those investments and must give companies the clarity and certainty to invest, hire and scale.
With broader tax rises likely elsewhere, R&D relief and innovation funding are the levers that can deliver growth without sacrificing fiscal discipline.