Funding sources for UK studios in 2026: what's on offer, and the requirements developers need to be aware of

Happy new-ish tax year! As we proceed into 2026/27, many UK businesses are preparing for what their new financial year brings.

Given the recent trends in the industry, it is understandable that some games studios aren’t feeling optimistic about the future. With publishers seemingly increasingly reluctant to take risks on early-stage projects and a general player preference for established franchises, many games are being held in development purgatory while developers look for the funds to bring their concepts to life.

However, there are methods to obtain at least some of the funding developers may need to get projects off the ground, or at least to put them in a better position to secure a more lucrative partnership.

Video Games Expenditure Credit

Video Games Expenditure Credit (VGEC) is a valuable benefit to UK games development and can help with cashflow if money is being spent.

Through VGEC, development studios can receive a tax credit constituting 34% of qualifying expenditure spent on the VGEC-qualifying game – the ‘qualifying’ expenditure being the lower of either 80% of the game’s core expenditure, or the total UK core costs spent on the game. This means that eligible development studios can receive a resulting Expenditure Credit of around 25.5% of eligible costs each financial year.

To be eligible for VGEC, you need to have a UK-registered company leading the development of the game, and your game needs:

• At least 10% of core expenditure to be ‘used and consumed’ in the UK
• To be accessible to the general public
• To pass the cultural test to be considered a ‘British’ game.

The cultural test doesn’t mean that your game needs to have Union Jacks in every corner, either. To obtain the 16 points required, points can be gained through areas like categories of UK expenditure, UK or EU personnel in key roles, and underlying material created by a British or EU national or ordinary resident.

While you need to spend money to receive money, a benefit of VGEC is the limited strings attached: the amount is credited or paid directly to your company through HMRC and can be spent however you wish, and any funds or credit received under the scheme are not repayable if your eligible game is cancelled.

In certain cases, the credit could be converted into a cash payment or used as the basis for a loan with the Expenditure Credit being used for repayment.

If your game started development before 1 April 2025, then you could consider the Video Games Tax Relief route, which allows you to claim tax relief on qualifying EU expenditure. However, bear in mind that this route is being discontinued and all projects moved to VGEC from 1 April 2027.

Development grants

For larger chunks of funding, there are various private and government-backed grants available for games studios.

Applying for platform-specific grants – such as the $5,000 to $150,000 Epic MegaGrant – are a consideration for when you have specific platforms in mind for your game. For those based outside the UK, Sony’s Hero Project supports independent developers in emerging markets, providing support and recoupable funding for developers based in India and the Middle East and North Africa (MENA) region.

However, as with any grant, these schemes are hugely competitive, and there is no certainty that you will succeed in receiving any money towards your game. For the Epic MegaGrant in particular, your application would be against not just gaming projects but a variety of other creative project prototypes from around the world using Unreal Engine, or projects where development will move to Unreal Engine.

There are also government-supported grants available for UK games companies. As of 13 April 2026, the UK Games Fund funding budget has been increased to £28.5 million, and you can apply to receive a grant from this pot of funding for up to 50% of your game’s total budget, for a total of between £20,000 and £250,000 (depending on whether you are applying for Entry Track, Emergent Track or Expansion Track). For narrative-focused video games, the UK Global Screen Fund can provide a grant between £50,000 and £200,000 over a three-year funding period.

If you are spending time on R&D activity to develop your game, you should keep an eye on the UK Research and Innovation (UKRI) website, where a specialist grant could be available to support your contribution to the wider industry. UKRI funding for game developers is mainly accessed through innovation and R&D programmes, particularly via Innovate UK and Arts and Humanities Research Council. Opportunities typically focus on new technologies, tools or collaborative projects (often with universities), delivered through schemes like Creative Catalyst and Creative Industries Clusters. As part of the UKRI’s offering, Scotland-based developers in the Tay Cities Region could also apply for a slice of funding from the government’s investment in creative industries in the area, which is up to £20 million in total.

We commonly see grants issued with restrictions on how developers can use the funds

When looking for a grant to fund your game, it’s important to check the terms of the grant ahead of signing any agreements. The best grant would be non-recoupable and non-exclusive (such as for a platform-specific grant) and with no restriction on how the grant can be used, while you retain full ownership of the IP in your game. However, the reality is that grants will have terms that need to be met and these should be considered alongside any grant application.

In particular, we commonly see grants issued with restrictions on how developers can use the funds, alongside regular reporting obligations to demonstrate that any expenditure has been limited to those approved expenditure categories. Depending on the amount given under the grant, the additional expense in preparing reports (which in some instances require a professional accountant to prepare) may unexpectedly eat into funds you expected to spend on the game.

Incubators and accelerators

A sometimes-unsung hero in the industry, incubators provide long-term support for early‑stage game developers to turn their prototypes into market‑ready games. Accelerators are usually similar but a shorter-term scheme that takes an early stage game, and provides structured support to place the studio in a position where it can grow and thrive. In both instances, this support can include mentorship from professionals (whose time is basically currency), workshops, networking opportunities and, in some instances, funding.

These competitive schemes typically include restrictions for who can apply. Some are open to first-time developers with minimal industry experience, while others support more established developers who've released their debut titles and are looking to build on what they’ve learned ahead of their next release. As a longer-term and structured commitment requiring active participation, finding the right incubator and accelerator for a project is a two-way process, and developers can shop around to find the right accelerator for them.

For those looking to bring sophisticated novel games to Roblox, two programmes are available: a “Jumpstart” programme for aspiring Roblox creators, and a recently-announced 6-month incubator programme for more established developers looking to branch out their existing Roblox catalogue, or bring their talent to the platform. While Roblox do not offer direct funding into its cohort’s projects, developers have the opportunity to speak to investors as part of the programme.

There are also university-based schemes open to their alumni (such as Falmouth University’s Games Academy programme, which is designed to help retain talent in the region after graduation), so it is worth checking whether you would be eligible for one of these.

Alternatively, developers looking to expand into the global market can look to the recently announced Video Game Release initiative from the UK Global Screen Fund, which will support UK game developers to boost international sales of their game, providing support for marketing, promotion and localisation.

Private funding

While entering into a commercial relationship with a publisher to fund a game is the more popular option, it is still possible to acquire funding through connections outside the realm of developer-publisher relationships.

Venture capital firms and angel investors with a specialism in or passion for games, entertainment and/or technology can be willing to invest in a game while it’s being developed, typically in return for a stake in the development company. Depending on the percentage shareholding given to the investor, this exchange can allow the investor to have some control over the operation of the company outside of the game – with the investor having the ability to vote in company matters that require shareholder input, such as the allotment of new shares and the sale of major assets.

Crowdfunding

An older tactic that is now used more commonly by the tabletop games industry, crowdfunding can be used to raise money from, and build, your future audience, while also giving you an insight into the hype and potential popularity of the game.

Most suited for games with a novel/niche audience in mind, crowdfunding has brought us some genre-defining titles (Hollow Knight and Undertale being two well-known examples) but can still be a risky option for games without a clear back-up plan. Slow progress, irregular updates or failing to complete the game at all can push away your (otherwise engaged) audience from future projects when you’ve only just started.

Carefully scoping out the costs that need to be covered is essential for any crowdfunding campaign, and it is a good idea to add a healthy margin on top. Make sure that the costs of any additional items offered through stretch goals are also factored in, as that can often catch crowdfunding newbies out (especially if those additional items include physical goods which would be subject to manufacturing and testing costs, and other surprise costs like tariffs, which all stack more than you might expect).

Questions you need to ask about funding

A range of different funding methods are available – and developers are likely to find more success in combining multiple options where possible.

However, it is important to ensure that the conditions of each funding method do not conflict with one another or cause other issues:

• Check IP ownership. Do you retain ownership of the IP, or do you have conflicting IP-ownership provisions? For example, under one funding agreement you warrant that you own the IP in the game, but in a later agreement you may be asked to assign it to your funding partner.

• Exclusivity. Are there any conflicting exclusivity provisions imposed by the funding option? This could include platform-specific exclusivity, or how the IP can be used.

• Milestone reviews. If you have more than one party reviewing and approving milestones, then this could overcomplicate or delay making progress on the game. Are there conflicting milestone schedules that would need to be married up?

• Independent developer status. Many of these initiatives are open only to independent studios, meaning that if your company is later acquired by a publisher or private investor, you could inadvertently breach the terms of a funding agreement.

• Caps on government funding. Under the Subsidy Control Act 2022, you cannot receive more than £315,000 in total over a 3-year period from government-backed funding initiatives – covering grants like the UK Games Fund and UK Global Screen Fund. Note that a common misconception is that VGEC falls into this, or that you cannot claim VGEC where you have received funding from these government-backed initiatives, but this is not the case. However, grant money must be aggregated with VGEC reliefs, and must not exceed the applicable State Aid and intensity cap (which is typically 50% of the total development budget).

If your new funding partner is not willing to cover any payments that may need to be made to a previous funder for breaching the terms of their funding agreement, then you could accidentally lose a chunk of the money you had in your development budget.

Before committing to a funding method, it is worth running it by a lawyer to check for any onerous terms, conflicting provisions or just general red flags you may not have considered – we love this kind of thing.

Note: There may be additional requirements to access one of the above schemes – please ensure that you do your own research before deciding whether one of the above schemes is suitable for your project.