Autumn Budget 2021: Finerva Insights Into What It Means For UK Business
Here’s a summary of the most relevant measures from Rishi Sunak’s Autumn Budget 2021 that we feel are going to affect UK start-ups, scale-ups, and SMEs.
Although the Government didn’t pre-release any tantalising pieces of information for the founder community prior to Budget Day, it was encouraging to learn that “making this country a science and technology superpower” is one of its long-term goals.
But first the bad news. Inflation is “likely to rise further”, according to the Office for Budget for Responsibility (OBR). It expects inflation to average 4% next year. Clearly, we must all be on our guard.
The good news is that the Chancellor says the economy is set to return to its pre-Covid level at the turn of the year. A tad earlier than was forecast. The OBR has lifted its prediction for economic growth in 2021 to 6.5%, up from its previous forecast of 4% and expects the economy to grow by 6% in 2022.
Four important takeaways for founders
So, what’s important in this Autumn Budget for our community of founders and entrepreneurs?
Here are four things likely to be of relevance to you:
1. R&D Tax Credits for data and cloud computing
Companies claiming R&D Credits, data and cloud computing costs will now form part of eligible R&D expenditure. It is not clear at this stage how exactly these items will be defined so we will post more details when we have them.
Rishi Sunak also raised the prospect that R&D relief will be limited to work undertaken in the UK. He said, “From April 2023 the relief will have to subsidise investment at home”.
This is all because last year companies claimed UK tax relief on £48bn of R&D spending yet UK business investment was around half of that, at just £26bn.
It will be interesting to see the details as to how this will work, and which companies will be affected.
2. ‘Help to Grow’ initiative
Good to hear that Rishi believes that “innovation comes from the imagination, drive and risk-taking of business.”
‘Help to Grow’ is being launched to turbocharge SME productivity and will include:
- New co-investment venture capital fund – Future Fund: Breakthrough
- New £1.4bn Global Britain Investment Fund
- Increase to £1.6bn the British Business Banks regional financing programmes
We don’t know the full details behind these announcements but once we do, we shall let you know.
3. Tap into Net Zero
The government will allocate an additional £11.4bn new funding into its net-zero strategy, which supports new, green industries of the future.
It means that since March the government has invested a total of £30bn into the UK’s ‘green industrial revolution’.
This Monday, the new UK Infrastructure Bank announced its first-ever investment – £107m to support offshore wind in Teesside. All designed to help the country reach its net-zero goal.
Whilst smaller businesses struggle to make net-zero a financial priority, the Chancellor confirmed investment relief to encourage the adoption of green technology such as solar panels.
This all supports last week’s announcement that London is the best place in the world for green finance.
4. Attract the Best Talent
Did you know that half of the UK’s fastest growing companies have a foreign-born founder? With the current shortage of skilled employees, it is essential that the UK is open and attractive to the best and brightest of talents.
Today’s Budget confirmed the eligibility criteria for the new Scale-Up Visa launch in Spring 2022. This will help fast-growing businesses to bring in highly skilled individuals more quickly and easily. The government will also introduce a High Potential Individual and Global Business Mobility visa.
It will also launch the Global Talent Network to “identify, attract and relocate the best global talent in key science and tech sectors.” The scheme will initially launch in the Bay Area, Boston and Bangalore.
P.S. Here are full details of Rishi Sunak’s: 3 March Spring Budget statement after the previous autumn’s address was delayed due to the coronavirus pandemic.