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 and is largely responsible for the major technology hub that the UK has become. Its thriving economy and mounting expertise in all areas of the digital industry has made the UK a great platform 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 nationwide. In fact, digital tech industries grew 32% faster than the rest of the economy. But is there enough government support for tech start-ups to develop?

According to the European Digital City Index, London has been ranked the number one city in Europe for supporting both start-ups and scale-ups and second in the world for supporting innovation and entrepreneurship. It’s not difficult to see why. 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, ten times more than that raised in 2010. If you also consider the city’s proximity to some of the world’s leading technology universities, direct access to well-connected mentors and innovators along with media clusters, it’s easy to understand London’s appeal.

So it’s no surprise that the government has pledged its support by introducing favourable legislative changes and tax cuts as well as allocating resources and increasing investment in the technology sector to encourage new business. 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. Whether it is through a bank or start-up loan, bootstrapping, or entry to an incubator or accelerator, it is likely you will use several methods to fund your business, particularly at the early stages.

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 finance and 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 apply for the chance to win funding amounts of anything between £250,000 and £10 million.
  • The London Co-Investment Fund: Founded and managed by Funding London and Capital Enterprise, the programme aims to invest in high growth tech, science and digital start-ups based in London. So far, it has raised £25 million from the Mayor of London’s Growing Places Fund 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

First and foremost, the website is the place to visit for the latest information regarding legislation, tax, funding and all other aspects of starting a business in the UK. Another similar government-run website is Business is Great. Along with a business support helpline, the website is a great resource for information whether you’re looking to start a new businesses or grow your existing one. 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 and job boards to new businesses looking to set up operations in London’s tech sector.

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. With regards to international trade, the government continues to focus on promoting the UK, not just London, as the ideal location for start-ups to set up outside of their home market and they have ensured support is available too.

Boasting one of the lowest corporation tax rates in the G20 and the second largest labour force in Europe, the UK is an obvious choice to expand any company which can now be registered within 48 hours according to the website.

Tax Incentives

Along with funding opportunities, there is government support for tech start-ups 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 and an annual turnover of less than €100 million in order 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 under this scheme.
  • The Enterprise Investment Scheme (EIS): Similarly to SEIS, private investors are eligible to 30% income tax relief.

With the success that digital tech businesses have had on the economy, it is clear that the UK is fully committed to encouraging new business creation by offering more government support for tech start-ups. As seen in recent changes in legislations, tax cuts and new investment plans, the UK government continues to place the technology industry at the forefront of their incentives.

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