The UK government has placed technology at the core of its strategy in the latest budget announcements.
- A commitment of $2bn has been made towards NHS digital technology, indicating a move towards modernising public services.
- Capital gains tax changes have been modest, with adjustments expected but not substantial enough to deter investment.
- Challenging economic conditions persist, with expectations of 2.6% inflation over the next year.
- The budget outlines significant investments, including £975m for Aerospace R&D, yet calls for further commitments in tech sectors.
The recent UK budget underscores the government’s commitment to integrating technology into public services. A significant allocation of $2bn towards NHS digital technology illustrates a shift towards enhancing healthcare services with modern advancements. The government’s approach aligns with its broader strategy to embed technology at the heart of public sector reforms, a point emphasized heavily in the budget policy paper, where the term ‘technology’ appears 34 times.
Tax policy changes were less severe than anticipated for investors and entrepreneurs. The basic rate of capital gains tax will rise from 10% to 18%, while the higher rate increases from 20% to 24%. Despite these increases, the changes remain moderate, intending not to stifle entrepreneurship and investment climate. Similarly, tax on profits managed by private equity will rise, but this is not expected to severely impact the thriving UK tech investment landscape.
Economic challenges remain evident as high borrowing and spending could lead to prolonged inflationary pressures, projected by RSM UK to be around 2.6% over the forthcoming year. This situation presents potential barriers to the otherwise flourishing tech investment scene in the UK. Additionally, interest rates may adjust slower than typical under these conditions.
For tech companies, an increase in employers’ National Insurance to 15% for salaries over £5,000 poses additional costs. However, small businesses may find some relief through an increased employment allowance from £5,000 to £10,500. The incorporation of over 88,000 new UK tech companies since January 2023 symbolises the sector’s potential and the ambitious nature of these emerging enterprises.
The government’s industrial strategy, detailed in the budget, outlines investments of £975m for Aerospace R&D and £15bn in tax reliefs for creative industries, alongside £2bn for automotive. However, tech sector leaders are keen for these announcements to evolve into actionable commitments. The anticipated Artificial Intelligence Action Opportunities Action Plan may offer further pathways for tech integration and development.
The UK budget reinforces the government’s reliance on technology as a transformative tool while addressing economic adjustments that support this vision.
