23/3/11
By Sophie Baker
The Budget 2011 delivered some interesting points across the financial sector, with technology receiving a real mix of announcements.
Chancellor George Osborne’s speech, which ran up just 56 minutes on the clock, noted an improvement to both Research & Development (R&D) tax credits and to early stage investment in the sector – an opportunity for UK business to retain its competitiveness on the global stage.
Osborne revealed new plans to help businesses to protect their intellectual property: "In digital and creative industries we will improve the intellectual property regime," he said.
The Government’s decision to double the lifetime limit for Entrepreneur’s relief, from £5million to £10million of gains, will encourage serial entrepreneurs to stay in the UK, commented Niki Dixon, head of technology at Grant Thornton UK LLP.
“We would have liked to see a relaxation of the qualifying criteria but this is a positive start. This measure should help companies looking for seed funding.”
Osborne also unveiled plans for new Enterprise Zones, which will see businesses get “up to 100 per cent discount on rates, new superfast broadband and the potential to use enhanced capital allowances in zones where there is a strong focus on manufacturing.
In return for radically reduced planning restrictions, we will let local authorities keep all business rate growth in their zone for a period of at least 25 years to spend on development priorities,” the Chancellor said.
“The announcement of new Enterprise Zones should help high technology manufacturers outside the South East,” added Dixon. “The Zones are intended to encourage regeneration in deprived areas of the UK by offering enhanced tax reliefs to companies that invest in those areas. Whilst the announcement is welcome, it will not help the wider technology sector where investment has tended to focus on the South East. The simple logistics of securing skilled staff mitigates against setting up in locations that do not have ready access to that population.”
Dixon added that the intention to remove the 50 per cent tax rate as soon as circumstances allow should help UK business to compete against other technology hot spots.
The National Audit Office (NOA) said the commitment made to boosting enterprise in the UK is a welcome one.
The increase in Income Tax relief on the Enterprise Investment Scheme and the introduction of a new Enterprise Capital Growth Fund, providing more than £37.5million of equity finance to SMEs, are aimed at easing the burden on SMEs, the NOA said.
“It’s clear that the government is looking to make good on its recent pledge to attack what the Prime Minister calls the ‘enemies of enterprise’ and by offering support to British entrepreneurs, it’s clearly good news for those looking for a more diverse range of outsourcing suppliers, and not just those able to offer the fattest contracts,” said Andy Rogers and Bharat Vagadia at the NOA.
