UK tech eyes tax moves in Spring Statement
The UK’s tech sector is awaiting Rachel Reeves’ Spring Statement, as businesses look for support from the government on AI investment, digitalised healthcare, and scam prevention.
Industry heavyweights are urging the Chancellor to consider targeted tax incentives and upskilling initiatives.
They have also called for stronger regulatory frameworks to support growth and innovation amid burgeoning technology.
Tax breaks and AI:
Business leaders are eyeing tax breaks ahead of Reeves’ announcement.
A new survey by Qlik found that if corporation tax were to be reduced, 45 per cent of UK businesses would reinvest the savings into AI.
This would make its investment a higher priority than hiring or increasing wages.
The research revealed that London-based companies have shown the strongest focus on AI, with 54 per cent of respondents citing it as a key priority.
The survey also revealed that the UK business sector is looking for government support on workforce upskilling.
While 80 per cent of business leaders believe the private sector should lead AI skills development, 38 per cent said they require government incentives to ensure long-term investment in AI training.
The findings suggest that regional disparities in AI adoption could slow national growth if not addressed.
NHS digital transformation:
The HealthTech sector is also looking for clarity on the future of government investment.
Concerns have been raised around the uncertainty surrounding NHS funding, and the impact of digital transformation on efficiency.
Tom Whicher, chief executive of DrDoctor, said: “There is a lot of nervousness in the healthcare community about the Spring Statement. We’ve already seen significant changes in NHS management structures, but there is speculation about potential cuts.”
However, he added that “investment in digital healthcare solutions could improve efficiency, particularly in appointment management and administrative processes.
Increased AI investment for automation and diagnostics could crucially help reduce NHS waitlists, whilst more generally improving patient outcomes.
Fraud prevention:
With $1tr lost to fraud globally in 2024, the government has been urged to strengthen fraud prevention measures across the UK.
This plea comes amid rising AI-generated scams and cyber crime.
Marko Maras, a UK-based European fintech executive, has called for greater UK-EU collaboration to combat financial crime.
“Fraudsters are operating across borders, using AI-driven tactics to exploit regulatory loopholes”, he said.
“Stronger international cooperation is needed to prevent cyber criminals from taking advantage of gaps in enforcement.”
The industry is calling for enhanced intelligence-sharing and new regulatory measures to tackle the rising threat of AI-driven fraud.
A recent study by Naoris Protocol found that salaries for key cyber security positions in the private sector can be nearly double those offered in government.
“The risks to UK national security from cyber crime are real, and the potential costs and damage to critical national infrastructure are staggering”, said chief executive David Carvalho.
There is speculation that the Spring Statement may include measures to address these concerns, but no official proposals have been announced.
Policy announcements:
Government officials have hinted at a focus on efficiency and digital transformation ahead of Wednesday’s announcement.
Prime minister Keir Starmer told BBC Radio Live on Monday that AI and technology could play a vital role in improving public sector operations.
Meanwhile, the future of the UK’s digital services tax remains uncertain, amid a broader discussion with the US on potential trade agreements.
The tax, which generates £800m annually, is seen as a key policy affecting global tech firms operating across the UK.
The digital services tax (DST) was introduced in 2021, and levies a two per cent charge on big multinational online enterprises operating in the UK, a relatively low rate compared to many European counterparts.
Yet, the tax is highly unpopular with the current US administration, which focuses on a pro-US revenue agenda.
Speaking on the DST, Matthew Holman, AI lawyer at Cripps, noted that while the tax generates millions annually, this represents less than one per cent of the total tax collected in the UK.
He said: “The chancellor is likely trying to balance the need to appease US tech giants while maintaining support at home, especially as the UK electorate grows increasingly critical of tax cuts for large multinationals”.
He pointed out that further tariffs from the US could result in greater economic harm to the nation, with the potential loss of revenue from the DST offsetting any gains from relaxing the tax.