How can the Autumn Budget support tech growth?
There is no shortage of innovative start-ups and scale-ups in just about all areas of tech in the UK, including AI, cyber, deep tech, medtech, robotics – just about every letter of the alphabet is covered by a “tech”. But if these fantastic companies are to have any chance of becoming successful, high-growth businesses or even unicorns (worth $1 billion +), we must have much better access to substantial amounts of finance – which for scale-ups is currently lacking. So we need the Budget to continue with the successful tax incentives from prior years with a commitment from the Chancellor to roll-out new measures to secure increased funding.
I would like to see:
No further increases to employer’s NI – the increases in NI from this April have had a detrimental impact on many businesses, tech companies included. Higher prices for goods and services for customers have resulted. The large increase in employers’ NI has eroded operating margins unless corresponding increases in selling prices of goods and services or reductions in headcount can be made. Any further increase could result in longer holding periods for portfolio companies with delayed exits and delayed distributions to limited partner investors of the private equity and VC funds.
No increase to CGT – the Business Asset Disposal Relief (previously known as Entrepreneur’s Relief) is already set to increase to 18% in 2026. We may see some business being sold before the next tax year to avoid any further tax increase here, perhaps before reaching their optimal potential – and in the longer term it could result in reduced commercialisation of innovation and less opportunities for venture capital investment.
No further increase to tax on carried interest of PE and VC funds – and drop plans to tax this as income rather than capital gains. The Chancellor has previously stated that there will be further reforms in 2026 – let’s hope we do not see the income tax basis come in then.
Plans for increased investment in the regions, including the South-East in exciting expanding areas such as Reading and Thames Valley Berkshire where we have the new Reading Tech Cluster, successfully launched in July this year www.readingtechcluster.com
Confirmation of the continued extension of the EIS and VCT investment schemes to 2035 which will encourage continued interest from investors.
Most critically we need to get more finance available for scale-ups in the UK. The Mansion House Compact and Accord is a great initiative whereby participating pension schemes will commit up to 10% of their funds to private capital, including much needed venture and growth capital to allow our innovative tech companies to fund scale-up without having to go out to the USA VCs with their deeper pockets. The Chancellor’s commitment to get this up and running soonest will be welcomed!
