What’s in it for Tech Companies?
Philip Hammond’s second Budget had to steer a precarious path. Within the parameters of slowing UK growth, preparing for Brexit and a lack of spare money, he had to somehow end public sector austerity and continue reducing the deficit. Whilst trying to restore his own political reputation. Not an easy task! New policy announcements that caught the eye included:
- Tax Measures:
- From April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.
- From 1 January 2018, increasing the R&D expenditure credit, for companies claiming R&D relief under the large scheme, from 11% to 12%
- The government will also introduce a new advance tax clearance service for R&D expenditure credit claims.
- With effect from April 2019, withholding tax obligations will be extended to royalty payments, and payments for certain other rights, made to low or no tax jurisdictions in connection with sales to UK customers. The rules will apply regardless of where the payer is located.
- The government will consult in 2018 on the tax treatment of intellectual property (the Intangible Fixed Asset regime). This will consider whether there is an economic case for targeted changes to this regime, so that it better supports UK companies investing in intellectual property.
- Doubling the annual allowance for people investing in knowledge-intensive companies through the Enterprise Investment Scheme (EIS) and the annual investment those companies can receive through EIS and the Venture Capital Trust scheme.
- Changing the qualifying rules in Entrepreneurs’ Relief to remove the disincentive to accept external investment.
- Spending & Policy Measures:.
- Creation of a new Centre for Data Ethics and Innovation to enable and ensure safe, ethical and ground-breaking innovation in AI and data‑driven technologies.
- Establishing a new £10 million Regulators’ Pioneer Fund, to help unlock the potential of emerging technologies.
- Investing £21 million over the next 4 years to expand Tech City UK’s reach – to become ‘Tech Nation’. Tech Nation will roll out a dedicated sector program for leading UK tech specialisms, including AI and FinTech. Regional hubs will be located in: Cambridge, Bristol and Bath, Manchester, Newcastle, Leeds and Sheffield, Reading, Birmingham, Edinburgh and Glasgow, Belfast, and Cardiff.
- Providing a further £1 million to extend the UK Games Fund until 2020, aiding access to finance and business support for early stage video game developers.
- Establishing a new Geospatial Commission to provide strategic oversight to the various public bodies who hold this geospatial data.
- Supporting the transition to zero emission vehicles, the government will regulate to support the wider roll-out of charging infrastructure; invest £200 million, to be matched by private investment into a new £400 million Charging Investment Infrastructure Fund; and commit to electrify 25% of cars in central government department fleets by 2022. The government will also provide £100 million to guarantee continuation of the Plug-In Car Grant to 2020 to help consumers with the cost of purchasing a new battery electric vehicle.
- Confirming that the £4.7 billion NPIF investment in science and innovation announced at Autumn Statement 2016 will grow by a further £2.3 billion of additional spending in 2021-22, to support creative and digital industries.
- Investing an additional £406 million in maths and technical education, and in helping people develop the skills they need to succeed in the new economy.
- Announcing an action plan to unlock over £20 billion of patient capital investment to finance growth in innovative firms over 10 years by establishing a new £2.5 billion Investment Fund, investing in a series of private sector fund of funds of scale, backing new and emerging fund managers through the British Business Bank’s established Enterprise Capital Fund program, backing overseas investment in UK venture capital through the Department for International Trade, giving pension funds confidence that they can invest in assets supporting innovative firms as part of a diverse portfolio and launching a National Security Strategic Investment Fund to invest in advanced technologies to contribute to the national security mission.
Overall, most commentators will probably feel that this Budget further strengthens the UK’s reputation as a tech-friendly place to base a business.