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Budget 2023: Chancellor affirms tax relief for IT investment
Jeremy Hunt’s Spring Budget makes IT investment tax expendable for three years and announces support for artificial intelligence companies, including annual £1m ‘Manchester Prize’
Jeremy Hunt, Chancellor of the Exchequer, announced in his 2023 Spring Budget that money spent on IT equipment, plant or machinery can be deducted from taxable profits for the next three years.
He also announced measures to foster the UK’s artificial intelligence (AI) industry, which he claimed houses one-third of all European AI firms.
He said he was accepting “all nine of the digital technology recommendations made by Sir Patrick Vallance in the [emerging technologies] review I asked him to do in the Autumn Statement”. These include an “AI sandbox” to help AI companies get their products to market faster.
Hunt announced an annual £1m prize, for the next 10 years, for the person or team that does the best British AI research. He called this the “Manchester Prize”, after the first ever stored-programme computer built at the University of Manchester in 1948.
Alongside the Budget, the government has published a quantum computing strategy, with the chancellor declaring the government’s intention to be a “world-leading quantum-enabled economy by 2033” with £2.5bn in funding.
With a nod to Michael Heseltine’s promotion of Canary Wharf and Liverpool Docks as regeneration projects, during the years of the Thatcher and Major Conservative governments, Hunt announced 12 investment zones, to be based in the West Midlands, Greater Manchester, the north-east of England, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in Scotland, Wales and Northern Ireland, he said. Each zone will have a university teamed with a local authority, he said, and will be able to access £80m in central government support.
Hunt announced a commitment to provide £900m to put into practice the recommendations in the Future of compute review for an exascale supercomputer. The full Spring Budget report – known to the cognoscenti as the “red book” – noted that “according to the independent Future of compute review … the UK’s most powerful computer ranks just 28th in the world”.
The red book said of the government’s quantum strategy: “[It] sets out a new and ambitious quantum research and innovation programme. The government will invest a total of £2.5bn over 10 years, focusing on realising four goals: ensuring the UK is home to world-leading quantum science and engineering; supporting businesses through innovation funding opportunities and by providing access to world-leading R&D facilities; driving the use of quantum technologies in the UK; and creating a national and international regulatory framework.”
Gerard Grech, CEO of Tech Nation, welcomed the Budget announcements. “Today’s Budget is a positive indication of the UK government’s commitment to becoming a science and technology superpower. We welcome the measures aimed at supporting the UK tech industry, including the introduction of additional tax support for R&D and the announcements on an AI sandbox and ambitious quantum investment,” he said.
Commenting on the UK’s position between two economic powerhouses, the US and the EU, Grech said: “We must harness innovative regulation that will enable us to propel ourselves as an international hub and leader for AI, quantum computing and deep tech.”
Gerard Grech, Tech Nation
The UK Parliament’s Science and Technology Committee chair, Greg Clark MP, said: “I welcome the big focus on science and technology in this Budget. Sustained investment in research and development is key to boosting economic growth. That is why today I called for a rapid resolution of the question of the UK’s association with Horizon Europe.
“I am pleased the government has announced further backing for quantum technologies. The Science and Technology Committee will be launching an inquiry tomorrow to scrutinise the effectiveness of the government’s quantum plan to date, and will now include the £2.5bn investment announced today and how the UK compares globally in this strategically important area.
“I also welcome the publication of Sir Patrick Vallance’s review on pro-innovation regulation of emerging technologies. My committee will look carefully at the review’s findings, especially as we continue our inquiry into the regulation of AI. We hope to question Sir Patrick on his conclusions and recommendations before he departs as chief scientific adviser.”
Read more about government economic policy for technology
- Spring Statement: Chancellor expands R&D tax relief to cloud computing and storage.
- Spring Budget 2023: Campaign calls on government to ‘fix or ditch’ IR35.
- Brexit deregulation will make UK next Silicon Valley, vows Jeremy Hunt.