Comments provided by Anthony Lalsing.
As the UK hurtles towards BREXIT the technology sector will be looking for certainty around future funding and continued access to the best and brightest minds.
In Philip Hammond’s first Autumn Statement as Chancellor there was the warning of tough times ahead for the economy following the BREXIT referendum, but for the technology sector in particular there were some silver linings with ongoing commitments to R&D and an additional £400million in venture capital funds to benefit growing technology firms.
The Chancellor has kept his cards close to his chest and the Autumn Statement provided little in terms of detail, the budget in March provides an opportunity to start preparing for a UK outside the EU with the necessary fiscal measures to stimulate future growth.
R&D tax relief
The Government have singled-out R&D as a “key driver of economic growth” and the UK already has some very generous tax reliefs for companies carrying out R&D but many companies are still not making claims and missing out on a valuable source of funding. The Government now have a unique opportunity to further enhance these reliefs and design a system which works for the UK, simplifying the existing system and encouraging innovation without EU restrictions. The £2 billion a year pledged to R&D in the Autumn Statement was encouraging, but the budget needs to provide more detail, hopefully in the form of increased R&D tax reliefs with a simplified process for technology SMEs.
Funding is critical to the technology sector, especially given the “start-up” nature of many technology businesses which use this funding for initial innovative exploration before developing something which can be brought to market and exploited commercially. The government have a great opportunity to offer increased grant funding and enhance tax incentives such as EIS/SEIS investor reliefs now the constraints of EU State Aid regulation may be lifted. While the £400million in venture capital funds committed to protect British startups from buyouts announced in the Autumn Statement was a positive step it does not go far enough, further funding and tax incentives are required to stimulate investment and the Government has every opportunity if the EU shackles are removed.
Attracting and retaining talent
Talented people are the heart of the technology sector, they drive businesses and innovation. With Brexit now looking inevitable, the technology sector will be looking to the Government to provide a strategy for attracting future talent to the UK and retaining this talent. This could prove challenging if negotiations to leave the EU involve giving up access to the single market. While exit from the EU could close some doors it may well open other doors. If the Government are to realise their ambition for the UK to be the global leader in innovation, they need to attract talent from around the world, drive collaboration and provide the necessary incentives to create and retain talent in the UK.
Get more input on the 2017 Spring Budget implications for the Technology sector by speaking to our sector team.
Find out more about the Menzies Technology business services.