As the Autumn Budget approaches, RSM UK has outlined the support needed to boost the tech sector, including skilled immigration, targeted AI investment, and a clear roadmap to net zero. The leading audit, tax and consulting firm warns that rumours of cuts to capital gains tax relief are already stifling investment into tech companies.
Ben Bilsland, partner and head of technology sector, RSM UK, comments: “Rumoured changes to tax reliefs linked to investment and sales of businesses are already having a disruptive impact on the UK’s tech sector. Innovative tech companies require deep investment today to research and develop the solutions we will all use in the future. Changes to the reliefs currently available to investors and founders may dampen or cancel their appetite to invest in forward looking tech companies. This would be damaging to the tech sector as a whole.
“The uncertainty of the upcoming Budget is already causing disruption. We are seeing frantic activity among tech companies who are in discussions to raise investment or exit ahead of changes expected to be announced by the Chancellor.
“UK tech companies will also watch closely for changes in innovation reliefs linked to R&D spend. Drawing on these reliefs is vital for many UK tech companies as having a competitive R&D relief scheme encourages global businesses to locate their development workforces in the UK instead of overseas. Our recent research* showed 44% of tech businesses want to see improvements to innovation reliefs in the Autumn Budget.
“The UK should look to encourage skilled immigration, or we risk falling behind. It’s now more difficult to come to work in the UK from overseas. When tackling innovation, diversity is key. The UK wants to attract the very best global talent, so anything which makes it easier for those with tech skills to come to the UK would be welcome. Some of the world’s largest tech companies were founded by immigrants to the United States. A report by the National Foundation for American Policy in 2022 found that 55% of US startups valued $1bn or greater had at least one immigrant founder.
“A clear plan on clean energy would also be welcome. As we use more computers and data, data centres in particular require vast amounts of energy. As tech-driven trends increase our consumption of energy, we should look to the tech sector to provide the solution to managing the problem. The UK Government could pioneer funding and reliefs for businesses that use tech that enables us to meet our clean energy requirements.
“With more electric vehicles on our roads, the current lack of infrastructure to support them is also hampering UK expansion. Abundant and accessible super-fast chargers are required to address consumer nervousness about changing to an electric vehicle. Meaningful investment in real infrastructure to support electric cars would support the transition to these cleaner vehicles and would also be viewed favourably by manufacturers as they consider where to expand their global operations.
“Government investment in AI was paused earlier this year, causing consternation across UK tech. Whilst taking the time to develop a strategic approach is key, if the government takes too long the UK runs a risk of stalling and falling behind others in the race to harness the power of AI. The Autumn Budget may provide the ideal opportunity to outline a clear plan and commit to meaningful AI investment.”