So there we have it, Phillip Hammond’s first budget statement, and while the mic dropping ending of ‘abolishing the Autumn Statement’ in place of a Spring Statement and Autumn Budget was a bit of a shock, there were some positive things for small businesses to take from it.
“Britain is open for business… and will remain the destination to do business” – That’s what he said, but he has to say that doesn’t he!?
The question is, did the Autumn Statement support this? Well… Yes, potentially! The proposals put forward by the chancellor are pretty positive for startups and small businesses.
Here are the key policies for you:
£2bn additional investment in Research & Development per year
Let’s start with what we saw coming. There was a lot of talk prior to today about an increase in innovation support, but now we have a figure and a time scale. The government is set to invest £2bn more per year by 2020-21 in Research and Development. This is an important one to keep the UK attractive for entrepreneurs to do business in light of Brexit.
The policy shift ties into recent comments made by our new Prime Minister who is keen to increase the UK’s rate of changing startups into scaleups. We currently sit at 15 in the OECD table, there is definitely room to move up!
Learn more about R&D Tax Credits here.
£400m into VC funds to help startups scale
In a further commitment to support the UK’s small businesses, the Chancellor announced the government will invest £400m into VC funds, via the British Business Bank, to help small businesses with growth potential.
Hammond explained that this will unlock “£1bn of new finance for growing firms” which acts as “a first step to tackle the long-standing problem of our fastest growing startup tech firms being snapped up by bigger companies, rather than growing to scale”.
Doubling UK Export Finance capacity
This is good news for businesses like IoT’s looking to export their goods. It’s going to be easier with this additional support, which will heavily reduce the risk of UK export failure for lack of finance or insurance from the private sector.
£1bn investment in digital infrastructure
“My ambition is for the UK to be a world leader in 5G – that means a full finer network, a step change in speed, security and reliability.”
Those of you who have been pining for better broadband – This one’s for you!
The government will be using this £1bn investment to bring us more full-fibre broadband by 2020-21 and will also trial 5G technology. Main cities will immediately benefit from this when development begins, but whether this will also increase full-fibre broadband in rural areas is another question. But the outlook looks good for rural businesses.
Additionally, the introduction of 100% business rates relief for a five-year period on new fibre infrastructure will support further roll out of fibre to businesses.
Let’s hope we see some of the benefits in Old Street!
Increase in Rural Rate Relief
That’s right! In order to support and encourage businesses outside of major hubs like London, an increase to Rural Rate Relief will be implemented. This is a tax break worth up to £2900 for small businesses in rural areas. Dorset – The new tech hub!
Investment in UK transport infrastructure
In an attempt to replicate the lay of Silicon Valley, it was announced that the government will be committing to deliver an Oxford and Cambridge Expressway. This rail corridor, which also includes Milton Keynes, will bring a boost for the early growth scene between the hubs.
Corporation Tax will fall from 20% to 17% which confirms previous government announcements. Not Ireland, yet, but getting there!
National Living Wage to increase
Another confirmation of previous announcements; the National Living Wage will increase to £7.50 from April 2017. This is despite Brexit, which initiated some rumours of this policy being ditched to handle the financial impact of the EU departure.
A small note…
Our tax geeks have spotted something buried in the small print suggesting that there are going to be some technical changes to share conversion rights for EIS/SEIS/VCT, but at this stage, there’s no detail. But we’ll keep you posted the more we dig!
So there is reason for UK startups to be happy, following this statement. There is clearly a lot of attention and focus on innovation and development, now we just have to hope the financial pull of Brexit doesn’t counter it all!!