Investment for UK science and technology in UK Spring Budget

On 6 March Chancellor Jeremy Hunt delivered his Spring Budget which outlined some key investment packages for R&D and manufacturing within the UK. The Budget disclosed a series of initiatives that have been designed to support the science and technology industry in the UK. Within the Budget, the Chancellor announced a significant investment of £360 million specifically for the life sciences, automotive and aerospace sectors. This includes a joint government and industry investment of £92 million which is to expand facilities to manufacture life-saving medicines and diagnostics products. A further £200 million joint investment into zero-carbon aircraft technology is to be implemented to develop a more sustainable aviation sector, with an additional £73 million being invested in automotive technology.

 

The Budget further expands on how efforts are being made to help grow SMEs. Within the Budget, it is indicated that there will be further support for SMEs by increasing the VAT registration threshold from £85,000 to £90,000 to cut their taxes and help growth, which will take place starting on 1 April 2024 and  should take around 28,000 small businesses out of paying VAT. Furthermore, the government plans to merge current R&D Expenditure Credit (RDEC) and SME schemes. Within the merged scheme, the tax rate for loss-making companies will decrease from 25% to 19%. Further, the intensity threshold in the R&D intensives scheme will be lowered from 40% to 30%. The adjustment is expected to enable around 5,000 additional SMEs to qualify for an enhanced rate of relief.

 

A further point discussed within the Budget is the reversal of the January amendments to the definitions of High Net Worth (raised from £100,000 to £170,000) and Sophisticated Investors, which would have narrowed the pool of potential investors in start-ups. Further points made in the Budget included the extension of the Recovery Loan Scheme (renamed “Growth Guarantee Scheme”) to support SMEs to access the finance they require. The scheme aims to help 11,000 small businesses access the finance they need. Additionally, the government has announced a £7.4 million upskilling fund pilot aimed at helping SMEs to unlock new opportunities by developing AI skills. This will complement the SME Digital Adoption Taskforce which is to be set to explore how best to support SMEs to adopt digital technology to improve their productivity.

 

To further advance the field of science, the Budget includes additional investment in the improvement of technology. Regarding the technology aspect of the Budget, the Chancellor has announced initiatives for tech adoption. One of the points to help enable this is the aim to expand on investment for the future of AI within the UK. The government plans to invest£500 million into computer infrastructure over the next two financial years which will provide universities, scientists, and start-ups with the access to advance world-leading research and development, including in AI and life sciences.

 

This briefing is for general information purposes only and should not be used as a substitute for legal advice relating to your particular circumstances. We can discuss specific issues and facts on an individual basis. Please note that the law may have changed since the day this was first published in March 2024.