In the UK’s thriving tech sector, most of us favoured staying in the EU. Now we find ourselves in an uncertain landscape. Yet despite this, we have watched an incredible rise in the UK digital economy, with over 32% faster growth than other sectors. Last year saw record investment creating jobs 2.8 times faster, too.
Is there reason for optimism?
George Osborne has said the UK is ready to face the future “from a position of strength” and indicated there will be no immediate emergency Budget.
He said there would still need to be an “adjustment” in the UK economy. Moreover, to support the functioning of markets, the Bank of England stands ready to prove more than £250bn of additional funds.
He also reassured the nation that it was “perfectly sensible to wait for a new prime minister” before taking any such action. No rash decisions which is good news, at least…
So in short, what does this mean for your start up?
The UK has led the way in innovative policy; therefore we do not expect that EMI schemes, R&D tax or business taxation being affected. SEIS/EIS are restricted by EU rules so the UK will be allowed to do what it wants now.
George Osborne today indicated that there will no emergency budget after Brexit and there is a probability of a review at the autumn statement. So we might expect to see reductions in any future grant state aid with EU funding.
Probably the biggest change will be that it will no longer be required to give effect to the VAT directive and so will no longer have to require UK businesses to charge and pay VAT on domestic supplies of goods and services.
A UK government unconstrained by the VAT directive would have more flexibility as to the rate of a new UK sales tax and could, for example, set its own rates and determine the types of goods and services subject to each rate.
Understandably, there are concerns about the flow of talent and investment. Both are crucial to keep the UK at the forefront of digital innovation. Some believe as UK tech rely on EU workers and the affect of Brexit will make UK firms less competitive – talent is key. It’s bright minds from every nation — and especially from the EU — that are the key to the success of the UK’s tech sector, and this is where the biggest threat lies.
But others see leaving the EU will have a positive impact on UK companies because they have to get serious about training and retaining their best workers.
There is also a view because Technology is global, it cuts across borders and that open markets and cooperation will good for business. “This is not about fear, it is about opportunity — a market of 500 million consumers,” says techUK CEO Julian David, with Brexit allowing the UK to have more flexibility in the global economy.
The Accountancy Cloud offer accounting and tax solutions for tech start ups. If you’d like to discuss Brexit implications with any one of the team contact us at firstname.lastname@example.org or 0207 887 4527.