Investment and funding for tech companies

The Chancellor has reversed the thresholds to qualify as a high-net-worth individual, reinstating the £100k income threshold (from £170k). The higher thresholds were criticized as it was predicted that it would freeze out a number of angel investors, who would typically support a wide range of small businesses. So the return of the previous criteria is welcome in order to encourage diverse investment in the tech sector.

The government has extended the Recovery Loan Scheme to support SMEs in accessing finance they need, renaming it as the ‘Growth Guarantee Scheme’. Running until the end of March 2026, this scheme offers a 70% government backed loan to SMEs of up to £2m, offering an opportunity for SME tech companies in their growth phase.

The government is also supporting tech around the country, including providing funding to Spaceports in Shetland and Wales, funds for the Cambridge medical research and health science centre, and further funding for health tech in Canary Wharf.

R&D and HMRC activity

The new merged R&D scheme is going ahead from 1 April 2024. Whilst the Chancellor did not address combating R&D fraud, he did briefly mention bringing more dedicated resource to HMRC.

It has now been published that HMRC will establish an ‘expert advisory panel’ to support the administration of R&D reliefs. We hope this will go some way to addressing the aggressive approach HMRC have taken so far with some R&D claims, and even the playing field for tech companies in their R&D phase.

Our wish list and predictions

The Chancellor went ahead and offered workers a 2% cut in National Insurance contributions, but sadly no such cut was offered to employers, with the employer’s NIC rate sticking at 13.8%.

There is however an increase in the VAT threshold for the first time in seven years, from £85,000 to £90,000. This is to incentivise SMEs to grow their businesses but has the Chancellor gone far enough with just a £5k increase?

Our hopes that CGT would not increase were answered. Whilst he has not reduced the main rates of CGT, the higher rate of residential property CGT is reducing from 28% to 24%.

Elsewhere in the small print

A consultation has been launched seeking views on how to best implement the Crypto-Asset Reporting Framework. These changes impact institutions who provide a marketplace for crypto transactions, and the rules which are being introduced by 2027 will require institutions to share customer information. It is similar to the current Common Reporting Standard for sharing information across jurisdictions, but specifically for crypto assets.

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