Budget 2018 For Tech Companies And Startups

Budget 2018 For Tech Companies And Startups

Annual Investment Allowance (AIA)

The government will increase the Annual Investment Allowance to £1 million for all qualifying investment in plant and machinery made on or after 1 January 2019 until 31 December 2020, to help stimulate business investment.

Entrepreneurs’ Relief: minimum qualifying period

To support longer-term business investments, from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months.

Digital services tax (DST)

From April 2020, the government will introduce a new 2% tax on the revenues of certain digital businesses to ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users. The tax will:

  • apply to revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces
  • apply to revenues from those activities that are linked to the participation of UK users, subject to a £25 million per annum allowance
  • only apply to groups that generate global revenues from in-scope business activities in excess of £500 million per annum
  • include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins

Preventing abuse of R&D tax relief for small and medium-sized enterprises (SMEs)

To help prevent abuse of the payable credit, from 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year. This will ensure the relief is robust against identified abuse, including fraud, following the prevention by HMRC of fraudulent claims worth £300 million.19 The government will consult on this change.

Artificial Intelligence and data-driven innovation

The government has already taken action to ensure the UK is at the forefront of emerging digital technologies, including through the Industrial Strategy Artificial Intelligence (AI) and Data Grand Challenge, and an AI sector deal of up to £950 million. The Budget sets out the following next steps:

  • the Office for AI and Government Digital Service (GDS) will review how government can use AI, automation and data in new ways to drive public sector productivity and wider economic benefits. This will feed into the innovation strategy being led by the Cabinet Office
  • the Data Science Campus at the ONS and the GDS will conduct an audit of data science capability across the public sector, to make sure the UK public sector can realise the maximum benefits from data
  • the government established the UK’s pioneering Centre for Data Ethics and Innovation to ensure that people have confidence in how data and technologies, such as AI, are used. The Budget announces that the Centre has been commissioned to study the use of data in shaping people’s online experiences, and the potential for bias in decisions made using algorithms

Global AI and future talent fellowships

To attract, retain and develop world-leading research talent, the government will invest up to £50 million in new Turing AI Fellowships to bring the best global researchers in AI to the UK, and £100 million in an international fellowship scheme.

Catapults

To support entrepreneurs and businesses to access and adopt cutting‑edge technologies, the government is confirming £115 million to extend funding for the Digital Catapult, which has centres in the North East, South East and Northern Ireland, and the Medicines Discovery Catapult in Cheshire. This builds on the £1 billion in long-term funding already committed to the broader network of Catapult centres located across the UK.

Distributed Ledger Technology Field Labs

Distributed ledger technologies (DLT), such as blockchain, could revolutionise how information is recorded, protected, stored and shared, transforming financial markets, supply chains and public services. To test their potential, the Digital Catapult will run a series of DLT Field Labs, working with businesses, investors, and regulators in a range of areas, including in construction and the management of goods in ports.

Cryptoassets Taskforce

The Cryptoassets Taskforce was launched at the International Fintech Conference in March 2018. Following extensive work by HM Treasury, the Financial Conduct Authority (FCA) and the Bank of England, the Cryptoassets Taskforce report will be published alongside the Budget. The report will set out the UK’s approach to cryptoassets and distributed ledger technologies in financial services, including actions that will allow innovators to thrive and the benefits of these new technologies to be realised while at the same time mitigating the risks that arise from cryptoassets. This will ensure the UK maintains its international reputation as a financial services centre with high regulatory standards.

Backing entrepreneurs

To build on the UK’s reputation as one of the best places in the world to start and grow a business, the government will extend the funding of the British Business Bank’s Start-Up Loans Programme to 2021 so it can continue to provide loans and mentoring to entrepreneurs. The British Business Bank, which started operating in 2014, is the government’s UK-wide economic development bank. It makes finance markets for smaller businesses work more effectively, allowing those businesses to prosper, grow and build UK economic activity.



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