Some good news for Tech Start-ups
The chancellor’s Autumn Statement was his first and his last, and as the Budget moves to Autumn next year, the idea is to create less legislation in the future and he set out the Government’s desire to boost productivity through investment in high-value infrastructure and innovation projects so there is some good news for tech start ups!
However, on the legislation point given the hearty combination of Brexit, Making Tax Digital and the need to develop a tax system that truly copes with not only globalisation but also the online world, we’ll wait and see if he holds out on his promises.
There will be £400 million for a new Digital Infrastructure Investment Fund, at least matched by private finance, to invest in new fibre networks over the next 4 years, with the aim of deploying full-fibre access to millions more premises by 2020.
A new 100% business rates relief for new full-fibre infrastructure from 1 April 2017; this is designed to support roll out to more homes and businesses.
Investing in R&D will be a central part of the government’s Industrial Strategy with an additional £4.7 billion in R&D funding by 2020.
Additional funding will be allocated to increase research capacity and business innovation. Once established, UK Research and Investment (UKRI) will award funding on the basis of national excellence and will include a substantial increase in grant funding through Innovate UK. There also will be a review of the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK a competitive marketplace for technology.
The Autumn Statement has set out new incentives to boost international trade and exports from UK companies. One of the key announcements for tech start ups include private investment with £400 million from the British Business Bank to unlock £1 billion of new investment in innovative firms planning to scale up, and a doubling of capacity to support exporters through UK Export Finance.
The British Business Bank will also invest an additional £400 million in venture capital funds to unlock up to £1 billion of new investment in innovative firms planning to scale up.
The Chancellor has announced a specific measure to boost the UK fintech sector. To support investment in UK fintech, the Department for International Trade will provide £500,000 a year for FinTech specialists and the government has commissioned an annual ‘State of UK FinTech’ report on key metrics for investors.
And what you need to know on Tax…
Flat Rate Scheme VAT
Anti-forestalling measures apply ahead of April 2017 changes to the VAT Flat Rate Scheme (FRS) that will add a new 16.5% VAT flat rate percentage
Employee Shareholder share schemes
The previous chancellor’s share scheme loses its tax advantaged status for income tax and CGT for schemes starting on or after 1 December 2016.
Making Tax Digital: the government will publish its response to the Making Tax Digital consultations in January 2017.
Bringing non-resident companies’ UK income into the corporation tax regime
The government is considering bringing all non-resident companies receiving taxable income from the UK into the corporation tax regime.
Income tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work and ultra low emission cars.
National Living Wage and National Minimum Wage rates: go up: by 4.2% from £7.20 to £7.50 from April 2017.
National Insurance (employees): both employees and employers will start paying National Insurance on weekly earnings above £157 from April 2017.
Offshore and non-doms
Business Investment relief: a change from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in start ups.
Wesley of The Accountancy Cloud comments:
“Action to support ambitious tech businesses needs to be taken now and some of the key initiatives announced are very encouraging. The chancellor’s focus on getting behind tech and unleashing a new wave of productivity is exactly the vision needed for an uncertain period ahead. Investment in innovation underpins the UK’s national ambition. UK connectivity credentials shift from good to great. Government is rightly taken action by allocating £400m into British Business Bank mediating uncertainty arising on the European Investment Fund for start-ups and venture capital. Will we look back at this statement as the beginning of a tech scale up boom?”