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Technology, media and telecoms is a key sector for the UK economy, with the UK being dominant in the tech sector in Europe.
24 June 2024
Technology, media and telecoms (TMT) is a key sector for the UK economy, with the UK being dominant in the tech sector in Europe.
How could the UK general election result affect the sector?
The manifestos of the key parties show commitment to this sector with talk of continuing investment in innovation and R&D and pledges to boost R&D.
There is no mention of removing or reducing R&D tax credit incentives.
There has been a lot of change to this regime recently, and also with HMRC investigations, and a period of stability is to be welcomed.
The importance of AI is recognised by all, along with the need for a focus on regulation and accountability.
Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Venture Capital Trusts are also set to remain.
These provide tax relief to UK investors in innovative companies and are often a key part of structuring any funding.
A change to tax private equity on “carried interest” as income seems likely to follow the election. It’s possible this may cause some private equity investors to look to relocate from the UK.
Currently, such carried interest, generated over many years on private equity investments, is subject to CGT at 28%. Other jurisdictions have lower-taxed carried interest provisions which might make such a move attractive.
This could reduce the UK source of investment funding into the TMT sector, so that UK based TMT businesses will need to look elsewhere for investment.
The main parties all have a net zero commitment.
This commitment, if it results in investment and regulatory change, will create opportunities for tech and innovation in this area, both in terms of the market and being attractive to investors.
Overall, it’s good news there is no mention of removing the key tax reliefs which the sector relies on.
Most importantly, however, the sector relies on economic growth and investor confidence, and that will be the big ask of the new government.
It is worth noting that governments often do not always adhere to their manifesto promises, and we should have clarity on the new government's proposals once we have seen the Budget in the autumn.
For more insights into the election tax policies announced by the main parties, check out:
If you would like to discuss how the election and possible change of government may affect your taxes or those of your business, please contact your usual Bishop Fleming advisor.
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