What Costs Can You Claim on an Innovate UK Grant?
The cost categories, the overhead options, the funding rates by company size, and what match funding has to be. From UKRI's costs guidance, Innovate UK's grant terms and a current competition brief.
What can you claim, and how much will Innovate UK pay?
On an Innovate UK grant you can claim seven kinds of cost: labour, overheads, materials, capital usage, subcontracting, travel and subsistence, and other costs. Labour must be employees on PAYE, and overheads are either nothing, 20 per cent of labour, or a calculated rate approved before the award. Innovate UK then pays a share of the total. In a current competition brief that is up to 70 per cent for a micro or small business doing feasibility or industrial research, and up to 45 per cent for experimental development; a medium business gets up to 60 and 35 per cent. You fund the rest with real money, which cannot be in-kind or come from other public funding. Costs are claimed net of VAT, quarterly in arrears, usually paid within 30 days, with 10 per cent of the grant held back until the project ends. Rates are set competition by competition, so check your brief.
The seven cost categories
| Category | The rule that catches people out |
|---|---|
| Labour | Employees on PAYE only, from payroll records. No blended rates that include overheads, no discretionary bonuses or dividends. |
| Overheads | Three options: none, 20% of labour costs, or a calculated rate that Innovate UK reviews before award and that cannot then be exceeded. |
| Materials | Items used up in the project. |
| Capital usage | The cost of using equipment during the project, worked out as UKRI’s costs guidance sets out, rather than simply its purchase price. |
| Subcontract | Must be essential to the project. Associated companies charge at cost. Some competitions cap it, for example at 50% of total costs. |
| Travel and subsistence | Project travel. No first-class travel; visas and fuel are not eligible. |
| Other costs | Anything else the project needs. SMEs can claim up to £7,500 towards IP registration. |
What you cannot claim
- Anything incurred before the project start date: pre-start costs “cannot be claimed”.
- Blended labour rates that include overheads, discretionary bonuses and dividends.
- Work by people who are not employees on PAYE, unless it is costed as a subcontract.
- Entertainment and marketing, first-class travel, visas and fuel.
- The accounting services for independent accountant reports (IARs).
- VAT, if you are VAT-registered: grant funding is outside the scope of VAT, so costs are claimed net.
Funding rates and match funding
Innovate UK sets funding rates in each competition brief rather than in one general table. These are the rates in the current Growth Catalyst Investor Partnerships brief, and they are typical of business-led competitions.
| Type of work | Micro or small business | Medium business |
|---|---|---|
| Feasibility or industrial research | up to 70% | up to 60% |
| Experimental development | up to 45% | up to 35% |
Match funding is simply the rest. Innovate UK's guidance says “you are responsible for funding the remaining proportion”, that this “is not the same as in-kind match funding”, and that it “cannot be met through other public funding”. On a £200,000 experimental development project, a small business at 45 per cent receives £90,000 and must find £110,000 itself.
Some competitions add conditions. In Growth Catalyst Investor Partnerships, private investment must at least equal the grant for industrial research and be at least twice the grant for experimental development. Academic partners doing non-economic research are funded at 80 per cent of full economic cost.
How and when the money arrives
Innovate UK's grant terms say the grant is paid “by instalments quarterly … and in arrears on submission of a claim”, for completed quarters only, and normally within 30 days. A claim made more than 30 days after the quarter ends need not be paid. Innovate UK “will retain 10% of your maximum grant value until the project is complete”. A monitoring officer checks compliance and approves each claim.
The practical consequence: you spend first and are reimbursed up to four months later. Your cash flow plan needs to carry at least one full quarter of project costs, plus your own share, before the first payment lands.
Can the grant pay for help writing the application?
Innovate UK publishes no rule that names bid-writing fees, but its general rules exclude the usual case: costs before the project starts cannot be claimed, and claims must be for actual costs incurred and paid during the project. A fee for writing the application, or a success fee triggered by the award, falls outside that. Budget for it from your own funds. Our guide to grant writing costs sets out what that help costs in the UK.
Costs are scored, too
Costs and value for money is one of the ten scored questions in a typical competition, marked 1 to 10 like the rest. Costs that do not tie to the work plan, or a subcontract that looks like the real project, cost marks as well as money. See how Innovate UK scores an application, or have EchoGrant's £250 Full Assessment score your draft against the criteria before you submit.
Questions people ask
What costs can I claim on an Innovate UK grant?
Seven categories: labour, overheads, materials, capital usage, subcontracting, travel and subsistence, and other costs. Labour must be employees on PAYE. Overheads can be nothing, 20 per cent of labour, or a calculated rate approved before award. Costs are claimed net of VAT if you are VAT-registered, quarterly in arrears, and only for work after the project starts. Ineligible items include entertainment, marketing, first-class travel, and the accounting services for independent accountant reports. Source: UKRI costs guidance, updated 28 August 2026.
How much match funding do I need for Innovate UK?
Whatever share of the project costs the grant does not cover. In a current competition brief, a micro or small business can get up to 70 per cent for feasibility or industrial research, so it funds at least 30 per cent; for experimental development it can get up to 45 per cent, so it funds at least 55 per cent. Medium firms get up to 60 and 35 per cent. Your contribution must be real money: Innovate UK says it is not the same as in-kind match funding and cannot come from other public funding. Rates are set competition by competition, so check your brief.
Can I claim overheads on an Innovate UK grant?
Yes, in one of three ways: claim no overheads, take 20 per cent of your labour costs, or calculate your actual overheads. A calculated rate is reviewed before the award and, once approved, cannot be exceeded. Most small companies take the 20 per cent option because it needs no calculation.
When is the Innovate UK grant paid?
Quarterly, in arrears. Innovate UK’s terms say the grant is paid in instalments on submission of a claim for a completed quarter, normally within 30 days. A claim made more than 30 days after the quarter ends need not be paid, and 10 per cent of the maximum grant is retained until the project is complete. You need cash to fund each quarter before it is reimbursed.
Can I use an Innovate UK grant to pay a grant writer?
Innovate UK publishes no specific rule on bid-writing fees, but the general rules rule out the usual case: costs incurred before the project starts “cannot be claimed”, and claims must be for actual costs incurred and paid during the project. A fee for writing the application, or a success fee triggered by the award, falls outside that, so plan to pay it from your own funds.
Sources, read on 12 October 2026: UKRI, costs guidance for non-academic organisations (updated 28 August 2026); Innovate UK grant terms and conditions (October 2025 version), clauses 9.3 to 9.13; the Growth Catalyst Investor Partnerships Round 2 competition brief; the Breakthrough Wave Competition 1 FAQ (July 2026) on match funding and the subcontract cap. Funding rates and caps differ between competitions; your brief is the authority for yours.
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