Chancellor Rachel Reeves unveiled the 2024 Budget, promising a decade of “national renewal.” But how does this budget support, or challenge, the UK’s vibrant technology sector, especially for start-ups and scale-ups? Let’s dive in:
1. National Insurance (NI) Changes
- 📈 Employers’ NI Rise: The 1.2% increase to 15% from April and reduced secondary threshold might impact hiring costs, especially for tech start-ups scaling up.
- Pros: Increased funding for public services, appealing to skilled tech professionals who value a strong social infrastructure.
- Cons: Could deter small tech companies, raising costs and potentially slowing headcount growth.
2. Capital Gains & Inheritance Tax
- 💼 Capital Gains Increase: Rates rise from 10% to 18% (lower) and 20% to 24% (higher).
- Pros: Modest changes keep the UK competitive internationally, maintaining attractiveness for tech investors.
- Cons: Inheritance tax freezes on business assets could deter multi-generational tech entrepreneurs from retaining business control.
3. Business Investment & Public Funding
- 💰 Sector-Specific Investment: £6.1bn is committed to engineering, biotech, and medical sciences, including £2bn for electric vehicle support.
- Pros: Encourages tech advancement in green sectors and supports the development of high-impact technologies.
- Cons: No dedicated fund for emerging digital or AI sectors; may feel insufficient for digital-first start-ups.
4. Minimum Wage Increase
- 📉 Wage Impact: A 6.7% hike to £12.21/hour.
- Pros: Higher wages may boost consumer demand for tech products and services.
- Cons: Smaller tech firms and bootstrapped start-ups could struggle with increased payrolls, affecting hiring plans.
5. Education & Skills Boost
- 📚 Education Funding: £6.7bn, including a real-term increase and £1bn uplift for special needs.
- Pros: Enhanced education supports future tech talent, critical for sectors reliant on high-skilled workers.
- Cons: Short-term relief, with tech firms potentially still experiencing a gap between skill needs and availability.
6. Fuel Duty Freeze
- ⛽️ Decision to Freeze Fuel Duty: Keeps transport costs stable.
- Pros: Positive for tech firms reliant on logistics, such as last-mile delivery start-ups.
- Cons: Missed opportunity to reallocate funds towards green initiatives, potentially affecting sustainability-focused tech sectors.
7. Abolishment of Non-Dom Tax Status
- 💸 Non-Dom Abolishment: Non-domicile status will end in April.
- Pros: Levels the playing field, promoting a fairer tax environment across sectors.
- Cons: Could deter international tech investors who were previously drawn to the UK for tax advantages.
8. NHS Investment
- 🏥 NHS Funding: £22.6bn boost with structural investments planned.
- Pros: Opportunity for med-tech and health-tech start-ups, aligning with the government’s prioritisation of health service innovation.
- Cons: Real impact remains to be seen; without systemic NHS changes, tech-driven efficiencies may be limited.
In Summary: The budget reflects an ambitious vision but brings notable challenges and opportunities for the tech sector. While sector-specific investments and educational boosts are welcome, increased business taxes and payroll costs may dampen enthusiasm among smaller tech start-ups and emerging players.
