An Autumn Statement to boost innovation

While the chancellor's statement lacked coverage in key areas we expected; updates to Save as You Earn (SAYE) schemes, Share Incentive Plans (SIPs), employee ownership taxation and energy cost savings, it's only fair to commend the UK Government for some of the steps it has taken.

We were pleased to see the introduction of several long-term policies like full expensing to drive business investment, and for the continuation of programs like EIS and VCT, critical for early-stage capital access. We also hope that reforms across R&D, spin-outs and open banking will collectively improve the landscape for high-growth start-ups.

EIS and VCT

We were pleased to hear the news that the chancellor has increased the VCT and EIS sunset clauses, extending them from April 2025 to April 2035.

Jas Bhogal, one of our Corporate Partners, comments:

The sunset clause extension offers early-stage businesses the opportunity to continue to seek investment in a climate of uncertainty with tax savings for their investors, providing them with the necessary financial backing and resources to grow and scale. This is great news all round for businesses seeking investment and it will provide our clients some extra peace of mind during economic hardship.

Championing university spin-outs

The government has accepted all the recommendations from an independent report, comprising a range of actions focused on improving policies, funding, and programs to better support university spin-outs through the commercialisation process.

Rob Cobley, a Commercial Partners, comments:

I'm thrilled by the government's focus on University spin-outs. Integrating University research into the business sector isn't just about novel start-ups; it's crucial for sustainable development. Support at early stages, streamlined regulations, and strong infrastructure are key in turning academic innovation into market success, shortening the distance between discovery and commercialisation and paving the way for ground-breaking advancements and a thriving entrepreneurial landscape.

Employee share schemes and ownership

While we anticipated a more prominent role for employee share schemes in the statement, it's important to highlight that the government is actively exploring methods to boost the effectiveness of the SAYE scheme and the SIP, to drive increased involvement. Similarly, we had hoped to see revisions to simplify the sales process for EOTs, however, in both instances the government has signalled potential changes in the future.

Samantha Lenox, Head of our Employee Incentives team comments:

Participation in all-employee share schemes or in an employee ownership trust provide a means for employees to earn financial rewards with tax breaks. However, these schemes can be difficult for companies to operate and that can be a barrier to participation. Particularly given the ongoing cost of living crisis, there is a real opportunity for the government to simplify these schemes to make them more accessible and improve the tax incentives for employees.

Financial services boost

The government plans to boost retail payments sector growth by repealing EU-derived payments authentication rules for better fraud prevention and improved customer payment experiences.

Next year, new legislation will establish a regulatory framework to fully leverage Open Banking, and a 'National Payments Vision' will be published to outline priorities and explore the role of the New Payments Architecture in collaboration with the Payment Systems Regulator and the Bank of England.

Support for R&D

The chancellor affirmed the introduction of a 'streamlined R&D tax relief,' merging the current R&D Expenditure Credit (RDEC) and the small or medium enterprise (SME) R&D schemes for accounting periods starting on or after April 1, 2024. The simplification and lower entry threshold to the single system is a step in the right direction and will allow more businesses to focus on innovation.

Overall, the Autumn Statement offers a much-needed confidence boost to businesses to navigate the current economic challenges while laying the foundation for future growth.