The Spring Budget 2023  is the Chancellor of the Exchequer Jeremy Hunt’s second statement, which was eagerly anticipated due to the severe economic impacts currently affecting the country. This Budget’s aim was to  contain the rate of inflation while simultaneously driving growth through support of small to medium enterprises (SMEs). 

The Budget was based on four primary ‘industrial pillars’: 

• Everywhere
• Enterprise 
• Employment 
• Education 

Worth noting is that the Government wants to establish 12 new low tax zones to promote investment throughout the UK in regions such as Northern Ireland, Scotland and Wales.

These are the key take away points that I see for venture capital:

• The corporation tax increase from 19% to 25%is going ahead. While this increase seems relatively large, it is worth mentioning that the UK still has the lowest corporation tax rate of all G7 nations. 
  
• The annual investment allowance will be increased to £1 million.
• A capital expensing mechanism is to be introduced for companies to fully offset their capital expenditure against their taxable profits. 
• The R&D tax credit scheme is enhanced, enabling companies to claim c.£27 for every £100 spent on R&D. 
• The Budget also brought artificial intelligence (AI) into focus. With c.1/3 of European AI companies residing in the UK, the Government intends to launch an AI sandbox and work with the intellectual property office to help defend the IP of AI companies (with a particular focus on generative AI systems). 
• A prize fund will be established to the extent of £1 million per year for 10 years, awarded to the person or team conducting the most ground-breaking research.
• New tax reliefs are introduced to support the UK’s creative sector, with 34%  tax relief for audio / visual companies and 35% tax relief for animation companies being provided.
• As the UK is following the global trend of an ageing population, the Chancellor indicated that in the forthcoming Autumn statement he intends to provide the ability for pension funds to gain further exposure to the venture capital industry in the UK. 
• The Chancellor will look to improve the attractiveness for the London Stock Exchange for companies listing. 
• As we have come to expect , there has been a consistent theme of sustainability and environmental focus; to this effect the Government intends to reclassify nuclear power as an environmentally sustainable industry and as such, avail of the same benefits as the solar and wind power industries. 

While there was no direct reference to EIS, the Treasury Committee said last week that the Chancellor intends to extend the scheme and will provide further details in due course. 

This budget appears to take some important steps to stabilise the economy, inflation and to provide further comfort for investors that the UK remains an exceptional place to set up a business.