Budget 2021 positions tech and media for future growth
Budget 2021 positions tech and media for future growth
The Chancellor had the technology and media sector at the heart of his vision for the future growth of the UK economy, with the announcement of a range of measures aimed at providing support to attract talent, encourage innovation and promote investment by businesses.
There was also an intent to introduce further changes in the future that are likely to benefit the technology and media sector, including the announcement of a consultation into the reform of R&D tax credits and a review into how the EMI share scheme can be extended or improved. The omission of an increase in Capital Gains Tax rates in the near future will also be welcome news for entrepreneurial owner-managers.
Some of the key measures announced that will have a beneficial effect on the sector include favourable visa reforms, the creation of a new £375m ‘Future Fund’ to provide capital to innovative businesses, and the introduction of a “super-deduction” for expenditure on qualifying plant and machinery:
- The visa reforms aim to attract and retain top talent to the UK in the fields of science, research and technology by introducing a new unsponsored, points-based visa for such workers and expanding the existing fast-track visa programme for scale-up businesses and entrepreneurs. These measures have the potential to fill the UK skills gap in the sector, as well as diversify the skills-set of workers in the UK.
- The Future Fund: Breakthrough is a scheme to encourage private investors to co-invest with the government in innovative, high-growth businesses that are R&D intensive. This will be relevant for businesses aiming to raise at least £20m in funding, with private venture capital investors matching the government’s contribution. In addition, the new UK Infrastructure Bank, with £12 billion of funds will target investment in tackling climate change and contribute to the green industrial revolution. This financing is likely to promote growth in the green technology space.
- Investment in plant and machinery between 1 April 2021 and 31 March 2023 will attract a 130% first-year capital allowance. This will be of most benefit to profitable, tax-paying companies in the sector, as the effect of this “super-deduction” will be to reduce the amount of corporation tax payable by 25p for every £1 spent on qualifying assets. This measure is intended to alleviate the cash tax effect of the increase in the main rate of corporation tax to 25% from 1 April 2023.
There was also acknowledgement that some media and entertainment businesses continue to struggle as the UK economy recovers from the impact of COVID-19. To continue to support the UK screen production industry, the £500 million Film and TV Production Restart Scheme has been extended for a further six months to 31 December 2021.
In addition to these measures to promote investment in the sector, there is a desire for the government to increase the productivity and performance of UK SMEs with the ‘Help to Grow: Digital’ scheme. This scheme is designed to help 100,000 SMEs adopt productivity-enhancing software and technology in order to increase efficiency and innovation in the way the SMEs operate. Under the scheme SME’s will be eligible for a voucher up to a maximum of £5,000 to cover up to half the cost of relevant software. This is likely to have an indirect and positive benefit to SME software providers to the SMEs through an increased demand in their products.
From start-ups to high-growth scale-ups and large multinationals, there was something in the Budget to help promote growth for technology and media businesses. Further focus on supporting innovative businesses is something we’re likely to see in the near future with the government launching a consultation into the reform of R&D tax credits to ensure the scheme remains relevant in today’s economy, boosting investment and expenditure in the area in order to remain competitive in a post-COVID-19, post-Brexit world.