Autumn Statement - a round up of key takeaways for the tech sector
The Prime Minister and the Chancellor have previously spoken about their desire to turn Britain into the world’s “next Silicon Valley”. The Autumn Statement was an opportunity to set out their plan for growth, and for boosting the tech sector.
The Autumn Statement aimed to reassure financial markets whilst also setting out a plan to support public services and kickstart economic growth. The Chancellor made ambitious claims "to turn Britain into the world’s next Silicon Valley".
"We need to be better at turning world-class innovation into world-class companies,” said Hunt.
He announced a number of policies, alongside a range of policy reviews that will take place over the coming year. While many of these announcements were positive for the tech sector, spending cuts will be challenging for smaller business. The economic forecast demonstrates the value of enabling the tech sector to boost economic growth rate.
CF Tech have set out the main policy announcements that will impact the Tech Sector.
Reforms to R&D incentives: The Government has announced that it will be increasing the rate of Research and Development Expenditure Credit (RDEC) from 13% to 20%. This increased rate comes along with the expansion of the credit to cover data costs and cloud computing. It means that R&D tax credits will increase at the same pace as the increase in corporation tax. In less positive news, the SME additional deduction will decrease significantly (from 130% to 86%) and the SME credit rate is also decreasing (from 14.5% to 10%). The SME deduction will be reviewed in early 2023.
Seed Enterprise Investment Scheme (SEIS): Launched in 2012, SEIS aims to encourage investments in early-stage startups. The Treasury confirmed that it is “increasing the generosity and availability of the Seed Enterprise Investment Scheme”.
Capital Gains Threshold: The Chancellor announced cuts to the current CGT tax free allowance. This will fall from £12,300 to £6,000 in April 2023, and then will fall again to £3,000 in 2024.
Dividend Tax threshold: Currently, there is a £2,000 tax-free allowance on dividend earnings. The Chancellor announced that this tax-free allowance will fall - reducing to £1,000 in 2023-24 and then to £500 in 2024-25.
Public R&D spending: The Government is maintaining its plans to increase public R&D spending to £20billion per year by 2025. It will also increase funding for the UK's 9 Catapults by 35%.
Digital Markets, Competition and Consumer Bill: The Chancellor announced that the Government would introduce the Digital Markets, Competition and Consumer Bill to provide new powers to the Digital Markets Unit in the CMA. The core objective of the bill is to provide the DMU with “powers to promote and tackle anti-competitive practice”. The bill also aims to open markets to greater competition to "encourage new challenger firms, spur innovation, and provide consumers with higher quality products and greater choice." This bill should foster a more competitive digital market whilst also protecting consumers.
Online Sales Tax: The Government have decided not to proceed with plans for an Online Sales Tax (OST)
Corporation Tax: The Chancellor confirmed that Corporation Tax will rise to 25% for companies with over £250,000 profits in April 2023. Given this rise, the previously proposed technical changes to the capital allowance super-deduction are being scrapped.
Business rates: The Chancellor announced that from April 2023, Business Rates will be updated to reflect changes in property values. The Chancellor did not set out what level the new rates would be set at. Property values were last revalued in 2017.
National Insurance Contributions: The Chancellor announced that the level at which employers pay Class 1 Secondary NICs for their employees will be fixed at £9,100 from April 2023 until April 2028.
Skills and Education: The Government will be rolling out skills bootcamps and introducing a Lifelong Learning entitlement from 2025. This will provide flexible finance for people to be able to upskill throughout their careers and lives. The Government also recommitted to implementing T Levels and to approving Higher Technical Qualifications. Sir Michael Barber has been appointed to advise on the implementation of the Government’s skills reform programme.
Annual Investment Allowance: The Chancellor announced that the temporary uplift from £200,000 to £1 million a year will remain permanent from April 2023 onwards. This is positive in terms of encouraging and supporting business investment.
Reforming EU Law: The Government's review of retained EU law in key growth industries, such as digital technology and financial services, is currently underway. Through the review, the Government hopes to identify changes which “have the greatest potential to unlock growth”. The review will conclude by the end of 2023. The Government has appointed its Chief Scientific Adviser and National Technology Officer Sir Patrick Vallance to consider how the UK could better regulate emerging technologies.
CF Tech will be planning a series of roundtables and events to discuss policies that would support the tech sector in 2023. Sign up as a member to get details of these events.