The 2016 Budget was described by the Prime Minister as ‘pro-enterprise’ and widely received as being pretty business-friendly. But what was there to get tech businesses excited again?
A whole lot of tax (relief)
…For small businesses. The real headline from this budget was the continuation of its ‘business tax road map’, aimed at simplifying business tax as well as providing breaks for small enterprises who need it. There are an awful lot of measures outlined, but the key points for businesses are:
A cut in corporation tax to 17% by 2020: Ultimately so profitable businesses can keep (and reinvest) more of their profits.
And a cut in capital gains tax from 28% to 20% (on the higher rate) and from 18% to 10% (on the basic rate): This should help stimulate investment in a burgeoning sector crying out for capitol and in continual need of new investors.
This is in theory good news for small, growing ventures. Osborne does also intend to reclaim £9 billion by closing loopholes through which multinationals can avoid tax. Whether or not these have the potential to cause big digital businesses to consider withdrawing from tech hotspots remains to be seen – the Government will hope increasingly-competitive corporation tax rates ensures their continual presence.
The cost of doing business is rising, property prices in particular, and this is pricing many out of their ideal locations – it’s something that’s increasingly holding back small firms. In order to combat this, the Chancellor announced a doubling of small business rate relief.
This means properties up to a rateable value of £12,000 will receive 100% relief from business, while organisations in properties with a rateable value of £12,000 to £15,000 could receive partial relief.
It sounds promising, but most properties suitable for 15-20 (or more) people in an area such as Tech City will generally come in well above these rateable values. In short it’s great news for startups looking for already-elusive small and affordable conventional rentals, but for almost everyone else it might not change a lot.
A tech powerhouse in the North?
As expected, George Osborne announced greater devolution to cities in the “Northern Powerhouse” and gave the green light to HS3, an expanded M62 and further key infrastructure projects to create a well-connected North of England.
However, the creation of a ‘tech powerhouse’ in the North, aided by this heightened connectivity will arguably come from the more specific investments in these areas: An extension of the Sheffield City Region Enterprise Zone; a £15 million investment in Newcastle’s National Institute for Smart Data, and a ‘science and innovation audit’ for the North West and Sheffield City regions have all been announced, while the ‘Midlands Engine’ has also seen serious financial injections.
The best of the rest
In amongst the headlines there were a number of other policies outlined that should directly benefit the tech sector:
Science and innovation audits
As touched on above, a number of regions will receive audits which should encourage them to ‘map the regions research and innovation strengths and identify areas of potential global competitive advantage’.
A bonus for the sharing economy
It didn’t grab the headlines, but people who trade online or make money through sharing property could be in for a boost. In theory this should be good news for both service users and business owners and should ensure the continual growth of the sharing economy. However, for property sharing websites the £1,000 figure could well be seen as fairly negligible in high-value areas such as central London.
A boost for key skills
To reflect the digitising economy, the government plan to support adults who take on further study with a view to retraining. This will entail: ‘loans…for level 3 to level 6 training in further education, part-time second degrees in STEM, and postgraduate taught master’s courses’. In short this should ensure a wider pool of candidates with the necessary STEM skills to succeed at a digital business.
The institute for coding
The UK is suffering from a shortage of development talent. The government is planning to put together a panel of experts to help create its £20 million Institute for Coding – this should help ensure more tech businesses have access to the skills they need.
What’s not there?
Despite claims of a positive budget for business, there are a couple of key areas tech businesses have missed out the most recent budget. Below is what we would have liked to see in our dream budget for 2016:
A stronger commitment to high-speed broadband
The Conservatives made a promise to ensure 95% of the population have access to superfast broadband by the year of 2017, however there was no mention of this in either this Budget or the 2015 Autumn Statement. All we really got was an extension of the government’s already-announced grants for high speed broadband in the South West.
> See also: 6 things you need to know about 5G
Rural broadband is a particular area for improvement, but outdated planning laws can make it difficult to install superfast broadband in any premises – so it was a shame to see no concrete policy in the Budget. The investment in HS3 is promising, but if we want to improve connectivity in the UK work must be done on the sluggish broadband many businesses still experience.
Replacement for the Growth Accelerator scheme
Last year’s Autumn Statement announced the shutdown of the government’s Growth Accelerator scheme. Despite a fairly disappointing take-up (only 18,000 out of an expected 26,000 signed up) small businesses were hugely disappointed.
We would have liked to see a replacement, which offers similar (if not much-improved) access to the Growth Accelerator’s unique combination of finance, support and networks. This would have been a huge boost to the nation’s small businesses; particularly those who have had difficulties accessing finance.
All in all it is an interesting budget, with some excellent news for businesses right at the smallest end of the scale – although there’s something for most to smile about. There are questions about whether or not it goes far enough however, in terms of its support for growing businesses or in ensuring tax loopholes are indeed closed. To quote the Chancellors oft-repeated phrase, it felt like a budget for the ‘next generation’ of businesses and their hopefully highly-skilled employees.
Sourced from Peter Ames, head of strategy, OfficeGenie.co.uk