The latest UK budget places significant emphasis on a ‘technology-enabled’ approach in public services.
- A $2bn investment in NHS digital technology highlights government’s commitment.
- Adjustments in capital gains tax rates could affect entrepreneurship and investment.
- Rising employer’s National Insurance presents additional challenges for tech firms.
- The budget outlines considerable funds for R&D across various sectors.
The recent UK budget emphasises a ‘technology-enabled’ approach as a cornerstone of public service reform. With £2bn allocated towards NHS digital technology, the government signifies its dedication to integrating technology within healthcare systems. This funding aims to enhance digital infrastructure, ensuring efficiency and improved patient outcomes.
In the financial realm, changes to capital gains tax were less severe than speculated. The basic rate on share profits is set to rise from 10% to 18%, and the higher rate from 20% to 24%. Despite these hikes, the government believes that entrepreneurial spirit and investment will not be adversely impacted. Additionally, taxes on profits from private equity deals will see an increase from 28% to 32%, a less formidable surge than projected, underscoring private equity’s growing influence in the UK tech investment scene.
However, a note of caution prevails with predictions of increasing inflation, partly driven by high borrowing and spending. RSM UK forecasts a 2.6% inflation increase over the upcoming year, with a slower decrease in interest rates potentially affecting the investment climate in the tech industry, highlighting the delicate balance between fiscal policy and market stability.
For tech companies, another concern is the rise in employer’s National Insurance to 15% on salaries above £5,000, presenting a financial challenge. Fortunately, small businesses may find relief with the employment allowance doubling from £5,000 to £10,500. The UK has seen the incorporation of 88,574 tech firms since the start of 2023, many of which remain small but ambitious, further demonstrating the sector’s potential for growth.
The government has articulated significant investments within its industrial strategy, earmarking £975m for aerospace R&D, £15bn in tax reliefs for creative sectors, and £2bn for automotive innovation. Furthermore, over £20bn has been retained for science-based R&D, promising benefits for tech companies within these fields. However, business leaders are advocating for more concrete commitments rather than promises. A forward-looking review led by Professor Dame Angela McLean and Dr Dave Smith will explore barriers to adopting transformative technologies, signalling ongoing discussions about boosting innovation and productivity.
The UK’s strategic budget signifies a strong commitment to a technology-driven future, although challenges in implementation and fiscal balance remain.
