IT Companies

The latest Budget: how will it affect IT companies?

Chancellor George Osborne delivered a Budget that set Britain the industrial aim of becoming Europe’s technology centre.

We will now consider the main proposals introduced in order to achieve this aim:

To provide the technology infrastructure required, the government promised funding for ultra-fast broadband and Wi-Fi in ten of the UK’s largest cities – Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and London – with a further £50 million available for smaller cities.

The Chancellor also announced a number of new reliefs, including a tax relief for the video games, animation and high-end television production sectors and an ‘above the line’ research and development (R&D) tax credit in 2013.

There was also a doubling of the Enterprise Management Incentive Scheme grant to £250,000, which will help IT companies recruit and retain top talent, as well as a programme of enterprise loans to help young people start their own businesses.

Furthermore, the government pledged to invest £60 million in a UK centre for aerodynamics, which will support innovation in aerospace technology, as well as commercialising new ideas and spin-off technologies with wider applications in other sectors.

Even before the Budget was announced, the government launched the National Loan Guarantee Scheme, designed to offer loans with a one percent lower interest rate to businesses with an annual turnover of less than £50 million. This will be achieved by the government guaranteeing £20 billion of borrowing by the participating banks, with this saving being passed on to other businesses.

Finally, with IT companies looking to win add-on business to counteract the decreasing value of their biggest contracts, there will be significant scope to achieve this through measures to tackle tax avoidance, including the increase in stamp duty, and the introduction of personal tax statements.

For more information on any of the measures introduced in the Budget, please contact us.

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