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Latest figures from the Office for Budget Responsibility have found that two million jobs were created during the last parliament, and while its forecast expects one million more jobs to created over the next five years, the Chancellor pledged two million during his Budget speech.
Business investment is also 31.9% higher now than 2010. “Higher investment leads to more jobs,” Osborne said.
A host of other announcements were made during the Budget, but it wasn’t clear how many were related to job creators in the tech sector, so we’ve delved into the fine print to find out what areas might impact startups and investors.
Although some areas outlined below are re-commitments to spending that has already been announced, and many binding decisions have been left to the next Spending Review, there are some policies that should prick up the ears of the tech crowd.
Business 

  • The government is cutting the corporation tax rate from 20% today to 19% in 2017 and 18% in 2020
  • The level of the Annual Investment Allowance for SMEs will be set at £200,000 starting in January 2016, a reduction from the current £500,000 level but not the £25,000 that some were expecting
  • The government will introduce a new National Living Wage (NLW) for workers aged 25 and above by introducing a “new premium on top of the National Minimum Wage (NMW)” set at £7.20 next year to rise to £9 by 2020. The wages of younger workers will continue to be underpinned by the core NMW
  • The government says it “recognises that this new NLW may increase costs for some businesses” so has pledged to increase the National Insurance contributions (NICs) Employment Allowance from £2,000 to £3,000 per year to help with additional wage costs. The government forecasts that up to 90,000 employers will see their NICs liability reduced to zero, with firms able to employ “four workers full-time on the new NLW next year without paying any NICs”
  • The Finance for Lending Scheme will continue to provide support for bank lending to SMEs into 2016, with the government saying gross lending increased by around 18% in the five months to May 2015 compared to the same period last year
  • Osborne outlined a plan to tackle corporate tax avoidance to bring in £7.2bn of lost revenue to the exchequer
  • Permanent non-domicile tax status is to be abolished

Venture capital
Although still subject to the Summer Finance Bill being rubber-stamped by the Queen, the government outlined a number of new rules for VCs. They:

  • require that all investments are made “with the intention to grow and develop a business”
  • require that all investors are ‘independent’ from the company at the time of the first share issue
  • introduce new qualifying criteria to limit relief on investment in ‘knowledge intensive’ companies
  • introduce a cap on the total investment a company may receive through the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) of £20m for knowledge intensive companies and £12m for other qualifying companies
  • increase the employee limit for knowledge intensive companies to 500 employees
  • introduce new rules to prevent EIS and VCT funds being used to acquire existing businesses
  • remove the requirement that 70% of Seed Enterprise Investment Scheme (SEIS) money must be spent before EIS or VCT funding can be raised for qualifying investments made on or after 6 April 2015
  • As announced at Autumn Statement 2014, the government will allow tax relief on bad debts incurred on P2P loans against other P2P income from April 2015, draft legislation on this will be published as part of the Finance Bill 2016
  • The government will consult over the summer on new rules around how withholding tax will apply to P2P loans, with new rules taking effect by April 2017

Investments, savings and pensions

  • The government will embrace peer-to-peer lending for the delivery of the Innovative Finance ISA from 6 April 2016, where people will be able to invest their savings into making loans via a crowdfunding platform, along with other potential areas like debt securities and equity. A public consultation is set to look at the extent of these measures
  • The government has pledged to reduce the amount of tax paid on dividends overall, including scrapping dividend tax credit and replacing it with a £5,000 tax-free dividend from April 2016
  • Tax rates on dividend income are being reduced for basic rate taxpayers, from 10% to 7.5%, higher rate taxpayers will continue to pay 32.5%, but additional rate taxpayers will be hit with an increase, to 38.1%
  • Dividends held in ISAs and pensions will continue to be tax free

Public sector reform

  • The government will provide seed funding to the Cabinet Office to work with departments on a “series of innovative business cases to inform the next Spending Review”. The government wants to create redesigned, user-friendly public services, “fit for the digital age, as well as delivering efficiencies”

Infrastructure

  • The government says it will deliver on its science capital commitment made in 2014 to invest £6.9bn up to 2021 in infrastructure to “investigate the great challenges of today, whether domestic, international or in space”
  • Already outlined in 2014, the government will invest £23m in six ‘Next Generation Digital Economy Centres’ over six sites – UCL, Swansea, Newcastle, Nottingham, York and Bath – with a further £22m of additional funding, and will partner on this with Local Enterprise Partnerships (LEPs), regional councils, and local SMEs. These centres will focus on the digital economy, including finance, healthcare and education
  • The government will invite universities, cities, LEPs and businesses to map strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits
  • The government is also encouraging universities to strengthen local collaboration and will continue to reward proposals that build on regional strengths, including through funding streams such as the Research Partnership Investment Fund. Further details on this will be laid out at the Spending Review
  • Universities are also being asked to develop proposals for supporting local collaboration, building on successful collaborative partnership models to be supported through funding streams such as the next £400m round of the Research Partnership Investment Fund
  • To provide specialist higher-level training in sectors that are critical to economic growth, the government has committed to the establishment of a network of National Colleges. They will provide “high-quality professional and technical routes into employment throughout the UK”

Skills

  • The government will introduce a levy on large UK employers to increase the number of apprenticeships by 3m, with the budget controlled by employers. Details including rates and implementation will be set out in the Spending Review
  • From the 2016-17 academic year, maintenance grants for lower-income students are being scrapper and replaced with loans for new students from England, paid back when their earnings exceed £21,000 a year
  • The government will consult on freezing the loan repayment threshold for the next five years and review the discount rate applied to student loans and other transactions to bring it more into line with the government’s long-term cost of borrowing
  • The government will allow institutions “offering high teaching quality to increase their tuition fees in line with inflation from 2017-18″, meaning the costs of university tuition may exceed the £9,000 current annual level, saying it will consult on the mechanisms to do this

Childcare

  • From September 2017 the government will extend the free childcare entitlement to 30 hours a week for working parents of three and four-year-olds

Northern Powerhouse

  • Building on the Northern Transport Strategy that was published by the government and Transport for the North (TfN) earlier this year, the government is committed to transport devolution in all of the country’s city regions that elect a Mayor, as well as across the counties, including overseeing the rollout of Oyster-style smart ticketing systems
  • The government is still delivering on Health North, set to go live in autumn 2015 via ‘Connected Health Cities’ where it is “assembling experts and technology to provide better care for patients promoting innovation through analysis of data on the effectiveness of different drugs, treatments and health pathways”
  • The government is improving road connectivity in the North by upgrading the A628 and dualling the A61, and by upgrading the final stretch of the M1/A1 route between Newcastle and London

Europe

  • Although there was no budgetary announcement around the ongoing negotiations with Europe, the document emphasises that the government “has a clear plan of reform, renegotiation and referendum, to make the EU a source of growth, jobs, innovation and success… The single currency is not for all member states in the EU, but the single market and the EU as a whole must work for all”

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