Spring Budget 2024

In the Autumn Statement 2023 there were a number of announcements made which were likely to significantly impact the fintech sector, such as R&D tax credit reforms and further investment in digital adoption, with more plans to fuel sector growth. Earlier today, Chancellor Jeremy Hunt delivered the Spring Budget outlining key policies including tax cuts, greater investment in AI research hubs and packaged support for regions across the UK.  

CEO of FinTech Wales, Sarah Kocianski, commented on some key announcements affecting UK fintechs: 

Reversal of angel investor rule change

At the end of January 2024, a change to financial promotion exemption rules was implemented that raised the qualifying income threshold for High Net Worth or Sophisticated investors, from £100,000 to £170,000. The update was widely criticised by groups including the StartUp Coalition, which warned the change would disproportionately exclude women and underrepresented groups from investing opportunities. The reversal has been confirmed during the Spring Budget with further work to review the scope of the exemptions promised.

“This decision is absolutely the right one — without it there was a major risk that Angel investing would be restricted to a tiny proportion of those wanting to support new businesses and, in all likelihood, concentrated in London. The reversal ensures we can continue to build diversity in the Angel investing arena across the United Kingdom, including in Wales.”

Investment in AI Research Hubs

In a move to establish the UK as a global leader in AI research and innovation, the Chancellor announced a significant increase in funding for the Alan Turing Institute, the national institute for data science and AI, amounting to £100 million over a five-year period. A £7.4m AI upskilling fund for SMEs has also been announced as part of a new SME Digital Adoption Taskforce.

AI is an enabler for many fintech innovations, and the development of further AI capability and utilisation will play a pivotal role in areas like automation and risk management, and allowing fintechs to provide a strong customer experience with increased productivity. 

“AI has been the buzzword of the moment for a while, but we’re finally starting to see it used in various forms to make a tangible difference to the way businesses are started and run. In fintech, AI is empowering true innovation and the upskilling fund is especially welcome as a way to ensure that continues to happen.”

R&D tax relief reform 

Updates to R&D tax reliefs came in the form of the establishment of an expert advisory panel to support their administration by HMRC.  This follows on from the announcement of a series of reforms to the R&D tax relief scheme last Autumn, targeting simplification, which include the merging of SME and RDEC schemes. That removes the need for growing companies to transition between the SME and RDEC schemes

“We welcome any initiative that eases the process by which fintechs can access tax relief credits that in turn frees up capital for innovation.”