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THE BUDGET 2016: WHAT'S IN IT FOR TECHNOLOGY

Thursday 17th March 2016
Exciting times ahead?

Driverless vehicles
A key feature from yesterday’s budget announcement was the confirmation of driverless Lorries and cars to be trialled on UK roads in the next year. With the government stating that ‘we want the UK to be a “global centre for excellence in connected and autonomous vehicles”.

"Connected corridor"
Plans for a £15m connected corridor between Dover and London with infrastructure that could communicate directly with vehicles. This will run alongside the trials for autonomous cars in an aim to improve efficiency of driverless cars and lorries.

Digital fuel signage
Trials of comparative fuel signage on the M5 motorway between Bristol and Exeter will make an entrance which will allow drivers to see the best deals (in real time) on fuel.

5G UK

Development of a "5G" strategy in 2017, preparing the UK for next-generation wireless communications.

All sounds very exciting but apparently it’s not all good news for everyone…

Tech City Tax

Employees who get in on the ground floor to make huge gains from rapidly growing companies will be limited in the gains they can make tax-free under a new “Tech City Tax”, it has emerged.

Using Employee Shareholder Status, staff members who were awarded shares in a company up to a value of £50,000 — often as an incentive to aid the firm’s growth — would previously enjoy a tax-free gain with no limit when those shares were sold.

Now, any employee receiving shares from today (March 17th) will be allowed to make a tax-free gain of just £100,000 in their lifetime, according to yesterday’s Budget.

Tax expert Cormac Marum of accountant Harwood Hutton warned this could stymie growth of UK start-ups. He said: “The Chancellor seems to want people to be successful, but not too successful.

Large gains are normally found in successful tech start-ups where the value of the company can shoot up rapidly, so this could be seen as a Tech City Tax. This could deter companies from motivating their staff and, in turn, hit their rate of growth.

Contractor Tax - IR35
As expected, the Chancellor used the Budget to target public sector contractors in order to hit his fiscal targets. From 2017, liability for determining whether a contractor falls within IR35 will transfer from their limited company (e.g. Personal Service Company) to the engaging public sector organisation. However, this could fall on recruitment agencies where they are first to engage the contractor. 

Is this the beginning of the much suggested clampdown on contractors and ‘Personal Service Companies’ and how they are defined.  PSC’s will be banned in the public sector, although perhaps George Osbourne needs to realise PSC’s stretch beyond celebs raking in £000’s from the BBC for the TV presenting jobs.  What this will likely mean is that IT contractors will be under pressure to demonstrate they are a Consultancy and not operating alone.

Time will tell, but if you’re working on your own as a Contractor it might pay further down the line to make sure you have a few Contractor friends in case you need to collaborate through a single company name.  

Let us know your thoughts in yesterday’s budget and the government's plans for the technology sector. Tweet us or leave a comment below.
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