Highlights of the Chancellor’s Budget 2024

Budget 2024

The Chancellor’s Budget is likely to be the last one before the UK goes to the polls in a general election that will take place at some point this year, either sooner or later.

These are the key areas likely to be of most interest to the Angel and early-stage investment market.

Reversal of changes to HNW and Sophisticated criteria for Financial Promotions:

The Chancellor confirmed in the budget that the Government will legislate to reinstate the previous eligibility criteria to qualify as a high net worth or sophisticated investor, and will also carry out further work to review the scope of the exemptions. This legislation will be passed on 27th March.

This is a great relief and we will also be working with Treasury going forward to review the exemptions and will be reaching out to our community to gain your views on what tweaks or changes would be appropriate.  

Support to key growth sectors and innovation

R&D Tax reliefs

Following the announcement of the package of reforms to simplify and merge the R&D schemes and the considerable ongoing challenges for innovating small businesses, the Government has confirmed the establishment of anew expert advisory panel to support the administration of the Tax reliefs.

Tax reliefs for Creative Industries

£1bn additional tax reliefs were confirmed, including a new Independent Film tax credit at 53% credit for films under £15m budget; relief for investment in new studio space; additional 5% increase for UK visual effects in film and high end TV and permanent higher rates of tax reliefs at 40-45% for galleries, museums, theatres and orchestras -performing and visual arts

New £350m package for Advanced Manufacturing

A new £360 million funding package for R&D and manufacturing projects across the life sciences, automotive and aerospace sectors was also announced. This follows the Advanced Manufacturing Plan backed by £4.5 billion of targeted support announced at Autumn Statement to boost the British manufacturing sector.

This includes

  • £200 million joint investment in zero-carbon aircraft technology to develop a more sustainable aviation sector and almost £73 million in automotive technology.
  • £92 million joint government and industry investment to expand facilities to manufacture life-saving medicines and diagnostics products. Including £7.5 million to support two pharmaceutical companies who are investing a combined £84 million to expand their manufacturing plants in the UK.
  • Also £73 million in combined government and industry investment for cutting-edge automotive R&D projects to support the development of electric vehicle technology, delivering highly skilled jobs and cementing the UK’s position as a global hub for EV manufacturing.
  • Green Industries Growth Accelerator GIGA: The Government is adding a further £20m to further support expansion of low carbon manufacturing supply chains across the UK.
  • AI: new £7.4m upskilling fund pilot to support SMEs develop AI skills for the future. The Government is also investing £100m in the Alan Turing Institute over the next 5 years.

Life sciences

Companies will soon be able to apply for a share of the £520 million funding for life sciences manufacturing announced at Autumn Statement, with competitions for large scale investments opening for expressions of interest this summer and medium and smaller sized companies in the autumn (IUK). The fund is designed to build resilience for future health emergencies such as influenza pandemics and capitalise on the UK’s world-leading research and development.

The Long-Term Investment for Technology and Science (LIFTS) initiative

The LIFTS initiative will aim to create two new investment vehicles that are accessible to pension fund capital, unlocking over £1bn of total private capital, including from Defined Contribution (DC) pension schemes, to support innovative companies in the UK.  The results of the call for proposals to BBB were announced:

  • Schroders Capital, Schroders’ specialist private markets investment division has been awarded £150 million by the British Business Bank to invest into UK science and tech companies. This investment will be matched by Phoenix Group, the UK’s largest long-term savings and retirement business.
  • ICG plc, the global alternative asset manager’s European life sciences strategy, has been awarded £100 million by the British Business Bank to invest into the UK’s most innovative life sciences companies which will also be matched by Phoenix Group.

N.B. The awards are subject to completing commercial negotiations and the internal governance processes of all parties.

Pension Fund Reforms

Building on the Mansion House Compact that encouraged pension funds to invest at least 5% of their assets in unlisted equity, the Chancellor has announced further reforms to encourage greater transparency in the investments made by DC and Local authority pension funds. By 2027 DC pension funds across the market will disclose their levels of investment in British businesses, as well as their costs and net investment returns. Pension funds will be required to publicly compare their performance data against competitor schemes, including at least two schemes managing at least £10 billion in assets. The plans are subject to a consultation by the Financial Conduct Authority.

The Government has also committed to a framework to monitor progress on the Mansion House Compact ahead of its first anniversary in July.

New British ISA

Measures have also been announced to get more people and pension funds to invest in UK listed businesses. “The British ISA” will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs. This will be on top of the existing ISA allowances and ensure that British savers can benefit from the growth of the most promising UK businesses.

New Secondary Shares Market

The Chancellor confirmed the piloting of a new Private Intermittent and Capital Exchange Systems PISCES to introduce a new regulated market for the trading of privately owned secondary shares. This will offer the potential of a vital new boost to enable Angel investors and founders to gain liquidity whilst also increasing the potential pipeline for IPOs. 

General measures to support small Businesses 

  • Cut to main rate of National insurance Class 1 employee NICs from 10% to 8%, also 2p cut to self-employed NI rates from 6 April 2024.
  • VAT Registration threshold increased from £85k to £90k freezing at this level from 1 April 2024.
  • Extension of Full expensing capital allowance to assets for leasing.
  • Extension of the Recovery Loan Scheme renamed as the Growth Guarantee Scheme and extended until end March 2026.

By UKBAA 07 Mar 2024