A coalition of prominent technology companies, influential think tanks and industry leaders have come together ahead of the Autumn Statement to urge the UK government to take decisive action to support investment in digitalisation. 

In a joint industry letter, this collective calls for the introduction of enhanced tax reliefs for expenditure on digital services, a move that could enhance innovation and productivity across the UK’s business landscape.

The aim of the proposal is to empower small and medium-sized enterprises to embrace digitalisation and leverage emerging technologies like artificial intelligence to increase productivity and ensure sustainable growth.

To achieve this objective, the letter – endorsed by a wide range of industry voices, including techUK, Sage, Tech London Advocates and Global Tech Advocates, the North East Chambers of Commerce, Scotland IS, The App Association, eBay, Enterprise Nation, HP Inc, Gemserv, SAP UK Ltd, ServiceNow, Shopify and Zoom – recommends an increased tax deduction of 140% on the first £50,000 of expenditure on productivity-enhancing digital services. 

This represents an additional 40% compared to standard business expenditure and caps at a maximum of £17,500 in tax deduction.

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The UK digital economy is a vital contributor to the nation’s financial well-being, generating a staggering £392.9 billion in 20201. Nevertheless, the country lags behind its global counterparts in the adoption and application of digital technologies. According to research conducted by Be the Business, the UK invests less in technology compared to its G7 peers, even though 92% of SMEs consider technology crucial to their survival.

The consequences of falling behind in digital adoption are potentially dire, says the coalition, particularly in the context of the impending wave of AI deployment across the economy. Should this situation persist, the UK’s economic growth, competitiveness, and its aspiration to become a science and technology superpower are at risk.

The industry letter encourages the UK government and Chancellor Jeremy Hunt (pictured) to send a clear signal to the tech sector by supporting SMEs and underpinning tech investment through a simple digital adoption incentive scheme.

“SMEs are the backbone of the UK economy and need to get the right support to grow and scale,” said Julian David, CEO of techUK. “A coordinated effort to bolster digital services will not only empower SMEs but also propel the UK into a future where innovation, growth, and competitiveness are secured.

“The digital economy is the cornerstone of growth, promising to deliver a new generation of enterprises, tech startups, and innovation. This is an opportunity for the UK to regain momentum in tech adoption, essential for driving further investment.”

Steve Hare, CEO of Sage, said: “The UK government wants Britain to be a tech superpower, enabling home-grown businesses to compete internationally. For this to happen, it’s crucial SMBs are supported on this journey.

“Other nations have implemented policies that reinforce their digital infrastructure. It is time the UK not only follows suit, but aims to lead, by elevating financial incentives for SMBs when it comes to digital services.

“This will empower small and mid-sized business owners to become more productive and grow sustainably.”

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