Sunak’s 2020 budget holds little relief for UK Tech enterprises


Just three weeks into his new job as Chancellor of the Exchequer, Rishi Sunak will this afternoon present his first Budget Statement, as global economic forecasts stagger amid COVID-19 outbreak concerns.

Sunak is expected to reveal PM Boris Johnson‘s ambitious ‘UK revitalisation programme’, in which the government will pledge £600bn over five years improving rail and road networks, broadband coverage and affordable housing.

The government’s planned £600bn infrastructure outlay should fill-up the nation’s potholes, however, Sunak faces clear hazards on the economic direction of the country, as businesses tackle COVID-19, Brexit and a likely global-market slowdown in 2020.

Of note, Sunak’s first Spring Statement will outline PM Boris Johnson’s strategy and ambitions which will seek to ‘level-up’ a ‘free trading UK’ which is facing a decade of new economic and social challenges.

Ahead of Budget publication,  Sunak said: ‘This decade will provide even more opportunities for British businesses to export and trade with new partners across the world. ‘The Government will support business to seize these opportunities and thrive on the world stage.

Making ambitious pledges on infrastructure spending, Sunak is expected to scrap ‘entrepreneurs’ relief’, the popular enterprise scheme introduced by the 2010 Conservative-Liberal coalition government.

Current scheme terms allow UK start-up investors to pay capital gains tax at 10% rather than the usual rate of 20% when they sell a business valued at £10m or less.

Ending entrepreneurs’ relief, Sunak is expected to secure a further £3bn in funding towards the government’s infrastructure directives. 

Countering concerns that the government has closed an investment avenue for small businesses, Sunak is also expected to announce a £5bn funding increase which will be allocated to UK Export Finance (UKEF).

Preparing UK enterprise for ‘life outside EU restrictions’, the UKEF will be given an expanded remit to provide loans and credit lines for British exporters expanding their commercial pipelines. 

The £5bn funding represents the largest increase ever handed to the UKEF, taking its lending power up to £8bn mark.

Observers will be further monitoring whether Sunak maintains former Chancellor Philip Hammond’s plans to introduce a large-scale tech tax at 2p on remote digital transactions.

Hammond’s policy targeted multinational corporations such as Facebook, Amazon and Google, after a rise in public concerns over tax avoidance, in which former PM Theresa May’s government aimed to raise £500m through its transactional scheme. 

Nevertheless, the tax plan has been flagged by President Donald Trump’s administration as a potential red-flag in a future post-Brexit trade agreement between the US and UK.

Within his jam-packed agenda, the Chancellor is expected to scrap conservative plans to cut the corporation tax from 19% to 17%, maintaining a further £6bn a year in the Treasury’s pockets.

While tech incumbents await vital judgements, Sunak has promised that in 2020, highstreet businesses would be granted ‘temporary relief from business rates’.

Sunak’s offer is likely to be extended to the hospitality, travel and airline industries, countering COVID-19 impacts.