The year 2016 will potentially go down in history as one of the most politically unstable in modern times.
Britain voted for Brexit, former Prime Minister David Cameron resigned, his successor Theresa May promised to deliver a hard exit from the European Union (EU), the pound declined in value as the country’s economic future outside of the EU was brought into question and Donald Trump somehow managed to win the US presidential election.
With this unexpected chain of events came a sense of uncertainty, which has never been good for business. It’s therefore hardly surprising that the eyes of most tech entrepreneurs in the UK will be eagerly fixed on Philip Hammond, the chancellor of the exchequer, as he is set to deliver his first Autumn Statement on Wednesday.
One of the most important political events of the year, the Autumn Statement will see HM Treasury disclose its plans for the economy; outlining its priorities for taxes and spending in the aftermath of the Brexit referendum.
A bold approach
So, what can we expect and most importantly, what would tech entrepreneurs like to hear Hammond say?
“My deep fear is that the Chancellor’s response to the potentially negative financial impact of Brexit will be an overly cautious approach and that whilst we will see much needed infrastructure spending commitments, there will not be the radical change that I think we need to taxes and investment in skills and technology,” said serial tech entrepreneur Martin Leuw.
With current events hot on his mind, Leuw went on to say that he’d like to see the Autumn Statement equip society with tools to proactively address change and additional measures to help small and medium sized businesses.
“We can’t curb immigration without incentivising employers in both corporates and particularly SMEs to invest time and money in skilling our own. This will not happen without adequate incentives, and whilst not as visible as infrastructure spending, its long term impact is crucial to our economy. The Apprenticeship Levy feels more like stick than carrot. Let’s get excited about a vision to transform our whole society into one that embraces technology and business through investment in STEMS where business is encouraged to take an active role,” he added.
Leuw also spoke about the need to invest in HealthTech. “Using new tools such as AI, robotics, genetics, VR and AR is essential and urgent to address the imbalance between supply and demand,” commented the entrepreneur whilst calling out for greater collaboration between incumbents.
Protection for SMEs and freelancers
Ed Molyneux, CEO and co-founder of Edinburgh-based FreeAgent, which IPO’ed last week, spoke about the need to protect freelancers and small businesses.
“I would like to see more guarantees of support for freelancers, contractors and the smallest micro-businesses – those who have traditionally been overlooked by UK chancellors at Budget time,” he said.
Additionally, the CEO urged the government to intervene and help guarantee prompt payments for freelance workers and small businesses.
“Late payment, in particular, is a huge issue for freelancers and micro-business owners. The vast majority of them have experienced clients that are chronic late payers, or who don’t pay at all, so I would like to see legislation introduced that specifically targets this problem,” continued Molyneux.
Although he noted the government’s plans to introduce a small business commissioner in the near future, Molyneux did not seem to think this was sufficient and called for greater action sooner rather than later.
“For contractors, I’d like to see a complete overhaul of IR35 legislation, which has a real, detrimental effect on small 1-2 person businesses and IT contractors who run their business as limited companies and take short-term contracts. Instead I would replace it with simpler, more robust and fairer rules around small businesses’ employment status,” he said.
The CEO also said he’d like more clarity on the government’s Making Tax Digital plans – through which HMRC hopes to move to a fully digital tax system by 2020 – and small businesses (making between £10,000 and the VAT threshold of £83,000) being given more time to prepare for the change.
Finally, Molyneux called out for the turnover threshold for the cash-basis reporting scheme to be raised to £166,000. This he said, would make digital tax easier for more UK businesses.
More tax benefits
Peter Johnston, founder of freelancer management platform Lystable was also keen to highlight the need for the UK government to capitalise on economic growth afforded by flexible working opportunities and to cater for this adaptable way of doing business.
“This is a huge opportunity for the UK government. We’d like to see the government offer tax benefits to businesses that hire more freelancers than full-time staff. We’d also like to see the barriers to entry for people to become a freelancer removed, by streamlining the tax process and reducing red tape,” said Johnston.
The founder and former product designer at Google said becoming a freelancer in the UK was currently deemed too risky and daunting. “That needs to change,” he concluded.
What to expect
The chancellor of the exchequer will deliver his Autumn Statement at 12:30pm on Wednesday 23rd November, following on from Theresa May’s pledge to invest £2bn a year on science research and technology.
As part of his speech, the chancellor is expected to announced over £1bn to boost broadband speeds in up to 2 million homes and businesses.
Hammond is also set to divulge details on how local authorities could bid for a chance to gain access to a £749m fund to trial 5G mobile networks.
Stay tuned for our Autumn Statement coverage and leave your thoughts in the comments section below.