What will George Osborne's 2013 Budget mean for the technology and IT sector?
The 2013 Budget included a number promises to help fix the ailing economy by boosting business, with many of those measures not due to come into place until after the next election. Key points included:
- A cut in corporation tax by 1% in April 2015. “Britain will have a 20% rate of corporation tax - the lowest business tax of any major economy in the world,” said George Osborne.
- Government announced a £3bn boost to infrastructure per year from 2015-2016, including broadband funding: "Setting plans out to 2020-21 for the most economically valuable areas of capital expenditure."
- The Budget also promised a “reproﬁling of funding for broadband programmes to support local delivery”, although details of what this entailed remained scarce at the time of publication.
- Government committed £1.6bn for its industrial strategy to provide funding to support strategies in 11 key sectors, including technology.
- "Above the line" research and development (R&D) tax credits will be increased from 9.1% to 10% for large companies, applying to the company’s full profit and loss account as of 2013, rather than a deduction from taxable profits only.“This will help make us one of the most internationally competitive places to innovate," said Osborne.
- The Technology Strategy Board will design and launch a new competition of up to £15m, inviting consortia bids to support digital content production through partnerships with industry, including specialist SMEs, educational research facilities and training providers.
- Government will provide £30m for an SME Growth Vouchers programme in England to test a variety of approaches to help SMEs overcome barriers to achieving growth.
- The government has decided to provide a limited extension of the capital gains tax holiday to continue to encourage investors to take up the new scheme Seed Investment Scheme, which offers 50% income tax relief on investments made into small, early-stage companies. Any investors making capital gains in 2013-14 will receive a 50% capital gains tax relief when they re-invest those gains into seed companies in either 2013-14 or 2014-15.
- Increased the value of contracts through the Small Business Research Initiative (SBRI), which aims to help technology SMEs better engage with government departments. Government will expand SBRI among key departments so that the value of contracts through this route increases from £40m in 2012-13 to over £100m in 2013-14 and over £200m in 2014-15.
- Government will legislate to change the rules for the taxing intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015, these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue. To support these changes, the government will legislate for the introduction of a Mini One Stop Shop from 1 January 2015. This will give businesses the option of registering in just the UK and accounting for VAT due in other member states using a single return.
- Osborne outlined plans for a new Employment Allowance for next April, that will see national insurance (NI) contributions paid by companies cut by up to £2,000 a year. He claimed 98% of the benefit of the measure would go to SMEs. The legislation will come into force next April. Businesses with fewer than 10 staff would see their employer NI contributions cut by 80%, the Treasury said.