The UK government is championing technology at the heart of its new budget strategy.
- A substantial commitment of $2 billion has been allocated to enhance NHS digital systems.
- Modest adjustments in capital gains tax rates aim to balance investment impacts.
- The rise in employer National Insurance contributions may affect tech companies.
- New initiatives focus on transformative technology adoption and innovation potential.
The UK government’s latest budget emphasizes a ‘technology-enabled’ approach, putting technology at the core of public service reforms. A significant $2 billion has been earmarked for advancing digital technology within the NHS, underscoring the government’s commitment to integrating technology into healthcare.
The budget introduces modest changes in capital gains tax: the basic rate on profits from selling shares is set to rise from 10% to 18%, while the higher rate will move from 20% to 24%. These adjustments are crafted to maintain a conducive environment for entrepreneurship and investment, despite initial concerns about potential deterrents.
Private equity managers will see a tax increase on profits from successful deals, from 28% to 32%. However, this was less significant than expected and reflects private equity’s established role in the UK’s tech investment landscape, which has seen numerous high-profile deals.
The budget acknowledges the challenges posed by high borrowing and spending, which are projected to drive up inflation to 2.6% over the next year. This could potentially slow the decline in interest rates, affecting the tech investment climate adversely.
Further, the increase in employer National Insurance to 15% for salaries above £5,000 represents an added financial burden for many UK tech firms. Nevertheless, smaller businesses may benefit from the increase in employment allowance from £5,000 to £10,500.
Since the beginning of 2023, 88,574 UK tech companies have been established, most of which are small but ambitious. Although the government’s industrial strategy outlines £975 million for Aerospace R&D, £15 billion in tax reliefs for creative industries, and £2 billion for automotive, tech companies are still seeking more substantial commitments.
Recognizing barriers to innovation, Professor Dame Angela McLean and Dr. Dave Smith are leading a review aimed at identifying obstacles to the adoption of transformative technologies. An Artificial Intelligence Action Opportunities Action Plan is also on the horizon, promising to further invigorate the tech landscape.
The UK’s technology-focused budget reflects a forward-thinking approach, although further clarity and commitment are sought by industry leaders.
