Support for start-ups, students, financial technology firms and big data research all featured in today’s Autumn Statement from the chancellor.
George Osborne promised a raft of measures designed to help SMEs. They included plans to extend small business rate relief from April 2015 to April 2016, extend tax relief for entrepreneurs and increase R&D tax credits for SMEs to 230 percent.
He also outlined a number of measures to support skills, with support for postgraduates and apprentices. This included the government backing loans worth up to £10,000 for all people under 30 taking taught Masters degrees, and abolishing National Insurance contributions for apprentices aged under 25, coming into effect from April 2016.
Starting and growing startups
The chancellor offered support for startups seeking access to finance. He said the government will provide £400 million to support venture capital through the British Business Bank and provide information to help businesses find alternative sources of finance if bank applications are turned down.
The government also hopes to encourage more investors to build successful entrepreneurial companies by allowing capital tax gains that are “eligible for Entrepreneurs’ Relief (ER) and deferred into investment under the Enterprise Investment Scheme (EIS) or Social Investment Tax Relief (SITR) to benefit from ER when the gain is realised”.
This means that the government is offering investors a lower tax rate of 10 percent, instead of the usual 18 or 28 percent level, of capital gains tax paid on profit made when they sell the businesses, a representative for the Institute of Chartered Accountants in England and Wales explained.
Previously, investors would have been ineligible for the lower 10 percent ER rate if they had other investments that qualified for the EIS or SITR. However, the changes announced today mean that they will now be able to benefit from the lower tax rate even if they have EIS or SITR-qualifying investments.
Meanwhile, the government plans to introduce a new digital process in 2016 to make it easier for investors and companies to register for the venture capital tax schemes.
The chancellor then turned his attention to the fintech sector, with a call for evidence on how APIs [Application Programming Interfaces] could be used in banking and support for Peer to Peer (P2P) and crowdfunding platforms.
The government will provide bad debt relief for P2P lending and will review regulations which currently suppress institutional lending through P2P platforms, he said.
Osborne also unveiled plans to invest £113 million in a big data centre in Hartree, Daresbury. HM Treasury said the centre will “enable non-computer specialists to gain insights from big data in order to enhance and design products, services and manufacturing processes”.
This is in addition to confirming that the £42 million Alan Turing big data centre, announced during March’s Budget, will be located in London.
Furthermore, the government will provide £9 million to increase a prize fund available for driverless car testbeds, which will be used for trials in Bristol, London, Milton Keynes and Coventry from next year. The original prize fund of £10 million was outlined in the National Infrastructure Plan in December 2013.
However, in early reactions a number of commentators expressed disappointment at the lack of detail on how the government could use technology to improve public services.
While welcoming the additional £2 billion pledged to NHS England, telehealth firm Imerja asked how the money “is going to be made available to support modernisation and investment in technology which will provide both immediate and long-term benefits.”
Thinktank Police Exchange’s head of technology policy Eddie Copeland said: “George Osborne has warned of further cuts, but it would be nice to hear more recognition of the need to redesign rather than cut public services. There is a huge role for tech there.”