Is the tech sector well served by the Spring Budget 2024?
As a result of a difficult fiscal environment, the Chancellor aims to strike a balance, providing support for businesses and technology adoption as well as tax cuts.
The Chancellor presented his Spring Budget 2024 with an eye towards the next election. There were a number of proposals designed to support those hardest hit by the rise in living costs and to freeze alcohol and fuel duties.
In advance of an election, the National Insurance rate was cut by another 2%, building on the already announced 2% cut in the Autumn Statement.
National Insurance was cut by raising tobacco duty and levying a vape levy. The UK's windfall tax on oil and gas profits was extended until 2029, while changes to the 'non-dom' status were made.
The UK's budget revealed the following about its economic outlook:
In its forecast, the Office for Budget Responsibility (OBR) says that the Chancellor will continue to adhere to his fiscal rules, resulting in a decline in national debt.
According to the OBR, business investment rose by 6.1%, faster than predicted in the autumn.
As a result, the British economy is expected to remain sluggish. OBR growth forecasts have not been significantly revised up since the autumn of 2024, when the economy entered a technical recession.
During the second quarter of 2024, inflation is expected to fall to the Bank of England's 2% target.
How did the tech sector fare?
Public spending is being refocused on technology and productivity:
In general, the Government is maintaining current levels of public spending. However, the Chancellor announced a new productivity plan for public spending.
With this, the NHS productivity plan was fully funded, and the Treasury's spending decisions were changed. Facilitating the allocation of funds to projects that will improve public service productivity.
Investment in tech clusters in the UK:
High tech clusters across the country will be supported by a range of 'levelling-up' investments announced by the Chancellor, including investments in the SaxaVord spaceport in Scotland, new homes and a medical technology cluster in Canary Wharf, as well as a long-term funding settlement for Cambridge's development.
R&D tax credit concerns addressed with HMRC:
HMRC will establish an expert advisory panel to support the administration of R&D tax reliefs, the Treasury says in response to concerns raised about how the R&D tax credit is being implemented. Research and development will be discussed across key sectors such as technology and life sciences, as well as relevant guidance, ensuring it remains current and provides clarity to claimants.
Expenses for leased assets should be extended to full:
This follows the capital investment relief announced in the previous budget. Businesses can deduct the full cost of eligible IT equipment, plant, and machinery in the year they are purchased or leased, helping them invest in new capital. This extension to leased assets enhances the competitiveness of the UK's capital incentives.
Investment in high growth companies can be boosted by financial and savings reforms:
To build on the Government's plans to encourage more investment in high-growth sectors such as the technology sector, the Chancellor announced a range of measures. Institutional investors, such as pension funds, and savers in the UK will be encouraged to invest in domestic companies through new transparency measures, while a new UK ISA will support savers and open up retail investment opportunities. Additionally to the existing ISA allowance, the UK ISA will have a £5,000 allowance. Offering people the chance to invest in UK-focused assets tax-free.
Additionally, we announced the winners of the LIFTS competition as Schroders and Intermediate Capital Group (ICG).
The angel investment rules have been reversed:
According to the Treasury, it will reverse plans to raise the income and net asset thresholds for Angel Investors in response to campaigners in the start-up community and the InvestHER campaign.
A few updates on compute:
There is a planned investment of over £1.5 billion in public compute by the Government. There was no new money announced in the Spring Budget, but details on how researchers and innovative companies can access these investments will be provided later in the year.
Upskilling and adoption of digital technologies:
In order to help SMEs develop AI skills, a £7.4 million pilot fund was announced. SME Digital Adoption Taskforce, which will be launched by the government shortly, will benefit from this funding. In order to boost SMEs' productivity, the taskforce will investigate how to encourage their adoption of digital technology.
Advancing smart data schemes, energy, and transportation:
Energy and transportation schemes are being accelerated through targeted funding and calls for evidence from the government.
The revised Growth Duty and the new performance framework are as follows:
Ofwat, Ofcom, and Ofgem will be covered by the Growth Duty, and refreshed guidance will be published. In the coming months, the government will also release a Regulator Performance Framework to encourage greater agility, efficiency and responsiveness among regulators.
The Alan Turing Institute has received additional funding:
Over the next five years, the Alan Turing Institute will receive up to £100 million in funding.