What did the Summer Budget offer technology businesses?
Following pre-election pledges to make the UK “the technology centre of Europe,” what did the first Conservative Budget in 18 years actually offer technology businesses?
Less than we might have expected. Patent Box and Research & Development tax credits were largely untouched, with only a minor drafting change announced. However, the Chancellor did announce a £6.9bn investment over the next 6 years to provide an infrastructure investigating “the great challenges of today” – inviting universities, cities, LEPs and businesses to identify areas of focus through a series of science and innovation audits. Catapult centres are also being extended and digital economy centres are to be created in six sites, including York and Nottingham, to exploit opportunities across various sectors including healthcare.
The Chancellor announced significant changes to the taxation of dividend income which will probably increase tax for most owner managed businesses.
The Budget contained more positive measures for business generally, including:
- 2% cut in corporation tax
- fixed amount of the Annual Investment Allowance at £200k
- Increased Employer Allowance for National Insurance.
Venture Capital Reliefs have been “refocused” to aim at younger, knowledge intensive businesses. Typically, this means they will be more restricted and complex, although where an investment qualifies generous tax reliefs are still available.
In summary, the Summer Budget announced little to set pulses racing in the technology sector but with existing generous R&D reliefs and the Patent Box regime there is perhaps enough to keep the blood flowing within the sector.