The top five ways the 2023 Spring Budget will impact the technology sector

1. New enhanced R&D tax credits

SMEs received a range of support through increased cashback for R&D efforts. From 1 April 2023, a tax credit of £27 for every £100 spent on qualifying R&D will be available for companies that spend at least 40% of their total expenditure on R&D. 

The government estimates that over 8,000 businesses could benefit from this, turning the UK into a ‘science superpower.’  It is also a significant and welcome U-turn from the 2022 Autumn budget statement that restricted the R&D tax credit to SMEs to clamp down on fraud.

2. New Tech Hubs

The announcement of a dozen new ‘innovation zones’ will enable regional hubs, that can demonstrate partnerships between universities and local governments, to benefit from £1bn funding. This will be delivered through tax reliefs and lighter touch regulation, including looser planning rules and lower business rates. The regional hubs are a key part of the ‘levelling up’ policy, with the UK tech sector being heavily dominated by London and the Southeast. Although it has also received criticism from environmental charities concerned about the impact on biodiversity in affected areas.

3. Artificial Intelligence (AI)

The announcement of a new regulatory AI sandbox to allow developers access, under supervision, to copy written code without risk of liability is part of the government’s plan to put the UK at the forefront of AI-enabled R&D.  The idea isn’t new and was recommended by Patrick Vallance, the former Chief Science Officer, to help fast-track science and technology breakthroughs. 

This announcement is also supported by the pledge of an annual £1 million award for AI research.

4. Computing

An eye-catching £900 million fund was committed for a world-class exascale computer to rival other leading nations, although details of how and where this will be built have yet to be released, we will update this article when we know more.

The chancellor also announced a 10-year commitment of £2.5bn to expand upon the UK’s existing skills and resources in quantum computing.

5. Seed Enterprise Investment Scheme (SEIS)

SEIS will become more attractive with an increase in the amount that companies can raise to £250k (previously £150k) with an increase in the gross assets threshold from £200k to £350k. Investors can take advantage of the tax savings when investing up to £200k (previously £100k).  With many tech companies using SEIS (and EIS) to raise early-stage funds, enhancing the SEIS scheme from April 2023 should be an immediate incentive for investment in the sector.

If you’d like to learn more about how you or your business could benefit from these changes, or if you require any further advice to help you scale, please complete the form below and we’ll be in touch.