Best Government Support for Tech Start-Ups in the UK

government support for tech start-ups

It is well known that London is the digital capital of Europe, because it is largely responsible for the major technology hub that the UK has become. A thriving economy and expertise in the digital industry makes the UK great for new business creation.

But what can you do to get even more support?

Europe’s Tech Nation

Digital tech businesses are at the heart of the UK economy. In 2016 alone they produced £161 billion in turnover and created 1.56 million jobs. Digital tech industries grew 32% faster than the rest of the economy.

According to the European Digital City Index, London has been ranked the number one city in Europe for supporting start-ups. It’s second in the world for supporting innovation and entrepreneurship. The capital city hosts the largest venture capitalist community along with Level39. Europe’s largest accelerator space for financial technology which contains over 100 companies.

Over the course of 2014, tech firms in London secured almost $1.4 billion in venture capital financing. 10x more than that raised in 2010. Consider the city’s proximity to the world’s leading universities, mentors, innovators and media clusters. Because it’s easy to see the value.

The government has pledged its support by introducing legislative changes, tax cuts as well as increasing investment. PM Theresa May recently announced plans to boost investment into science and technology innovation by £2bn per year and a review into R&D tax incentives to help more start-ups scale.

So what exactly does the UK government do to support tech start-ups? We take a look at the main resources available.


There are various ways to fund a start-up. It is likely you will use several methods to fund your business because of that.

However, there also quite a few routes to take with regards to government financial support:

  • Start-Up Loans: The government programme is aimed at businesses who struggle to access other forms of finance by providing support services. The scheme offers up to £25,000 at a fixed interest rate of 6% per annum for new business ideas.
  • Innovate UK: The public body holds regular funding competitions for businesses and research organisations. With a budget of £561 million, companies working on science and technology innovations can win between £250,000 and £10 million.
  • The London Co-Investment Fund: Founded by Funding London and Capital Enterprise, it aims to invest in high-growth tech, science and digital start-ups in London. It has raised £25 million from the to co-invest in seed rounds of £250,000 to £1 million.
  • The Small Business Research Initiative (SBRI): The initiative aims to support public sector challenges with innovative ideas from small and medium-sized enterprises. The competition based scheme allows businesses to win anything from £50,000 to £100,000 to test their idea which can lead to contracts of up to £1 million to develop it.

Government Support for Tech Start-Ups

The website is the place to visit because it stores the latest information regarding legislation, tax, funding a business in the UK. Along with a business support helpline, the website is a great resource for information. It offers advice on employment, regulation, intellectual property, financial matters, amongst many other topics.

Another resource of government support for tech start-ups is Tech.London, a joint project between the Mayor of London, investor Gust and lead sponsor IBM. The website offers information and resources such as events/job boards to businesses looking to set up operations.

Back in 2016, former Mayor of London Boris Johnson along with London & Partners set up the International Business Programme which focuses on helping UK start-ups set up and trade abroad. Boasting one of the lowest corporation tax rates in the G20 and the second largest labour force in Europe.

Tax Incentives

There is also government support in the form of tax incentives to encourage new business creation.

  • R&D Tax Credit: Companies which focus on science and technology advances are able to reduce their corporation tax by claiming an R&D tax credit. In order to qualify, firms must have fewer than 500 employees. An annual turnover of less than €100 million is required to claim relief equivalent to 225% of qualifying expenditure.
  • The Patent Box: This incentive enables companies to apply a 10% lower rate of corporation tax on profits. From the development and exploitation of patented inventions and other intellectual property introduced in the UK.
  • The Seed Enterprise Investment Scheme (SEIS): UK taxpayers investing in qualifying start-ups for the first £100,000 seed investment are eligible to 50% income tax relief.
  • The Enterprise Investment Scheme (EIS): Similarly to SEIS, private investors are eligible to 30% income tax relief.

With the success that digital tech has had on the economy, the UK is committed to encouraging new business.

Changes in legislations, tax cuts and new investment plans. These show the UK government continues to place the technology industry at the forefront of their incentives.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.