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UK Budget 2014: Where was focus on tech, says industry

Sam Shead | March 21, 2014
Chancellor's performance underwhelms many across tech and IT

However, start-ups, one of the major winners in last year's budget, are set to benefit in a number of areas, including newly introduced tax relief measures and the extension of the Seed Enterprise Investment Scheme (SEIS), which helps small early stage companies raise equity finance by offering tax relief to investors who subscribe to shares in higher risk small companies.

Dominic Preston, partner and UK innovation group leader at financial services firm, Grant Thornton, said: "The headline increase in R&D payable tax credit for loss making SMEs, from 11 percent to 14.5 percent, is a welcome boost for innovation businesses. This should act as an additional incentive for SMEs and their backers to drive forward R&D activities. However, looking at the economic analysis presented by HM Treasury, the net cost of this measure is only £55m over five years.

Ernst & Young suggested that the SMEs creating a buzz in places like Shoreditch in London, but not yet turning a profit, will benefit from the 14.5 percent cash credit, which will apply to all qualifying expenditure incurred after 1 April.

Caroline Artis, London senior partner at the global accountancy firm, added: "The extension [of the SEIS] should continue to encourage entrepreneurs and support the type of start-ups that Tech City already attracts and that Media City, recently backed by Boris Johnson, wants to attract," she said, claiming that SEIS has helped 1,600 companies raise over £135 million since April 2012 and the extra £60m of tax relief given today will be a great fillip for the industry.

However, not all start-ups were satisfied with tax breaks that were presented by Osborne today. Jan Quant, CEO of software firm Screendragon, pointed out that the £3 billion of export relief offered under the Annual Investment Allowance (AIA) won't be of any use to many in the tech sector, as it only supports those businesses with plants and machinery.

Elsewhere, the plans to double the number of apprenticeships, introduce degree level apprenticeships, and extend grants for employers taking on apprentices, were welcomed by those across the IT and technology sectors.

Graham Hunter, a director at the global IT Trade Association, CompTIA, said: "Apprenticeships are vital for filling the IT gap. As a serious, vocational profession, they represent one of the best ways for young people to enter the profession and for employers to recruit talented people at low cost to themselves.

"However, places available are not the same as places filled, and low awareness of both sides of the potential of apprenticeships remains a problem. We would like to see a greater push to employers and students to communicate the value and respectability of these apprenticeships.

 

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