Here are some of the announcements that will have an impact on the tech sector:
Non-Residential buildings tax relief: A 2% capital allowance for the building of non-residential structures and buildings. This will be a modest help for companies such as 4D that are looking to build new data centres and similar tech focused businesses in the UK.
Annual Investment Allowance: The Government will be increasing the amount of the allowance for all qualifying investment in plants and machinery, made in 2019 and 2020 to £1 million. Again, a welcome stimulus package for tech companies investing in hardware (data centres, biotech, 3D printing etc.), but it would have been even better if this incentive included non-physical expenditure, such as licenses and software.
Entrepreneur’s Relief: The minimum period in which the qualifying conditions for relief must be met will be increasing from 12 to 24 months. This is good for companies looking to pursue a longer term investment strategy.
Peer-to-peer networks: There will be an investment of £20 million in supporting networks of business people to help share best practice in business leadership and technology adoption. A good step towards spreading ideas, promoting best practices and improving productivity.
Small Business Leadership Programme: Working with businesses and business schools, the government is looking to create 2,000 places on the new programme aimed at supporting people to better understand business management, including technology adoption. A good long term strategy aimed at boosting UK productivity.
Additional R&D funding support: The Chancellor committed to an additional £1.6 billion in R&D funding in areas including quantum computing, artificial intelligence and nuclear fusion. The devil will be in the detail but this is a welcome step in making sure the UK maintains its technical competitive edge post-Brexit.
Made Smarter Review: £121 million for the ‘Made Smarter’ programme, which will support the transformation of manufacturing through digitally-enabled technology such as IoT (Internet of Things). There will also be up to £78 million for the Stephenson Challenge which supports innovation in electric motor technology. Another bet on boosting productivity through investment in technology.
Cyber Security: The Government announced a £50 million a year fund designed to address "the most pressing challenges" in areas such as public health and cyber-security. A good start at boosting investment in a fast growing but still relatively young sub-sector.
Quantum computing and AI: The government will invest an additional £235 million to support the development of quantum technologies –including £35 million for a new national quantum computing centre and £70 million from the Industrial Strategy Challenge Fund. There will also be up to £50 million ear marked for a new Turing AI Fellowships scheme, to bring the best global researchers in AI to the UK, and an extra £100 million in an international fellowship scheme. With the US and China well ahead in the quantum computing and AI race, this will keep the UK in the game (just).
Broadband: £200 million to pilot new approaches to deploying full fibre internet in rural locations, starting with fibre to schools – this is part of the The National Productivity Investment Fund. Whilst expected, it is a good start, though there will need to be significantly more invested in delivering fibre to the last 10% of rural communities.
Digital Services Tax: A new 2% tax on revenue from 2020 on companies deriving value from UK users in social media, search or online marketplace activity with a global revenue above £500 million. A tax aimed squarely at companies such as Facebook, Google and Amazon. Whilst this will be popular with the public who will see it as a way of levelling the playing field, it may end up having a chilling effect on multinational investment in the UK, create uncertainty on who this applies to (how do you define ‘social media’ companies) and end up punishing fast growing UK companies heading towards the £500m threshold.
Whilst this is clearly a crowd pleasing budget, the fly in the ointment is that the Chancellor qualified his budget with a ‘no deal’ caveat.