2023’s Spring Budget did not leave many surprises for the tech industry, which was already anticipating continued interest announcement of investment zones across the country.

Only a few weeks prior, the UK Government announced major funds intending to transform the UK into a science and technology superpower.

Here, we’ll run through some highlights affecting the tech world from the statement, as well as some reactions from major players in the Scottish tech ecosystem.

Taxes

Digital transformation efforts are seeing a significant tax reduction as any money invested into IT equipment, plant or machinery can be deducted from a company’s taxable profits.

Nick Stapleton, Managing Director, ETB Technologies, said: “The benefit of deducting this expense in full from taxable profits will encourage more businesses to invest in their IT equipment.

“However, with a broader focus on technology within the budget, one cannot ignore the value of refurbished IT equipment and the value it brings to the circular economy. As such, we would urge inclusion of refurbished equipment within this tax credit.”

Further, SMEs are due to receive a credit for R&D expenditures: if a qualifying SME spends 40% or more of their total expenditure on R&D, they will be able to claim a credit of £27 for every £100 they spend.

David Ovens, Joint Managing Director of Archangels, commented: “We welcome the UK Government’s decision to reverse cuts to the R&D tax credit regime for small businesses. These credits will continue to play an important role as a source of cash for early stage, often loss making, companies, particularly in the technology and life science sectors.”

Finally, over the next three years – and for potentially longer – corporation tax will be cut by £9 billion a year “to give us the best investment incentives of any advanced economy,” the Chancellor insisted.

Catherine McWilliam, Nations Director – Scotland at IoD Scotland, said: “Economic uncertainty has held businesses back from committing to investment in recent years, and so “full expensing”, in which every pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits will be welcomed by business leaders. It simplifies the system, removes confusion about whether digital investments count as capital and crucially incentivises investment by reducing the up-front cashflow risk.

“As a nation, Scotland has a rich history of innovation, and so the partial reversal of cuts to R&D tax credits is also very positive – however there is still a gap in policy around incentivising smaller companies to meet net zero targets, which we hope will come sooner rather than later.”

Adding further commentary, Vishal Chopra, Scotland Head of Tax at KPMG UK, said: “In terms of business taxes, the planned increase to the mainline Corporation Tax rate to 25% is going ahead despite concerns over the impact that this may have on UK competitiveness and investment.

“The big news in corporate taxation focused on capital expenditure where full expensing for qualifying spend on plant and machinery for the next three years has been introduced, as well as an enhanced tax credit in the R&D regime for certain small and medium sized enterprises.”

Nuclear

Addressing net-zero initiatives — and in an effort to create a more self-sustaining British energy supply — the Chancellor also announced a continued investment into nuclear energy.

Nuclear power will now be classed as ‘environmentally sustainable’ in the UK’s green taxonomy. Nuclear energy will now have access to the same investment incentives as other renewable energy sources.

Furthering previous initiatives announced in the Autumn Budget, the Chancellor is also launching Great British Nuclear in an effort to bring down costs and provide opportunities across the supply chain. This is with an aim of having nuclear energy provide up to a quarter of UK electricity by 2050.

Next, a competition for Small Modular Reactors will also begin to venture into the potential of this technology.

MedTech

Remarking on the quick pace of the UK’s development and approval of Covid-19 vaccines, the chancellor is also set to take advantage of the UK’s single market by creating a different model for the approval of new medicines.

By 2024, the model will allow for a rapid approval for medical technologies and medicines that are already approved by other similar regulators in Europe, the US, and Japan.

Artificial Intelligence (AI)

The Chancellor gave special recognition to AI in his speech, announcing £900m of funding to provide horsepower for AI technology. The funding will be implemented according to recommendations in the Future of Compute Review for an Exascale supercomputer.

Brian Hills, CEO, The Data Lab, the Scotland’s AI and data innovation centre, said: “The inclusion of and investment in AI in today’s budget are hugely welcomed. We see every day how AI can benefit all sectors – from health to construction.

“The recognition of that today is significant, particularly as we have seen a rise in generative AI tools come to the market of late. As anyone who works in or with AI will know, IP ownership is notoriously tricky to define – clarity around this will benefit the UK’s innovation sector as a whole.”

Further, quantum computing will also receiving funding totalling £2.4b by 2033 for the quantum strategy in order to set out the UK’s “vision to be a world leading quantum enabled economy,” the Chancellor said.

Gerard Gech, CEO of Tech Nation commented: “As a nation uniquely positioned between two economic powerhouses, the US and the EU, 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.

“This is a critical step towards creating a distinctive, value-driven tech ecosystem in the UK, setting us apart from other tech hubs.”

In addition to this, the Chancellor announced a new price of £1m for groundbreaking AI research in Britain, titled the Manchester Award.

Malcolm Seagrave, Chief Growth Officer at xDesign, said: “Today’s Budget underlines how technology investment remains core to the government’s growth plans – from the £1m annual Manchester Award for ground-breaking AI research to investment in a supercomputer – and how it is now leaning on the sector to lead the country’s economic recovery.”

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Workforce
The Chancellor announced many broad reaching initiatives he already mentioned in his Bloomberg statement to get more people back to work in Britain.

Hunt is particularly targeting over 50s, announcing apprenticeships to retrain and reskill older generations to encourage them to rejoin the workforce after many retired after Covid.

To encourage those with disabilities back to work, the Chancellor also announced a grant scheme to help those with disabilities find appropriate work if they so choose.

More importantly, the Work Capability Assessment will be abolished, and benefit entitlement will be separated from an individual’s ability to work, potentially opening up thousands of Brits to work without fear of losing their financial support.

Addressing a major barrier for many people – especially women – from entering and staying in the workforce, the chancellor turned to childcare. He announced several different aids for childcare, including incentives for childminders, funding afterschool care initiatives, as well as providing free childcare for eligible working households with children over the age of 9 months.

Helena Di Biase, Managing Partner at Raising Partners, a Glasgow-based company that specialises in securing funding for early-stage companies, said: “The additional childcare provision for children aged one and two is probably the single biggest thing that will improve the number of women working across all sectors, but particularly the ability of those to enter entrepreneurship.”