Ben Bilsland, partner and head of technology industry at RSM UK, comments ahead of the Autumn Budget 2025: “UK tech is an innovation led sector, making the R&D tax scheme crucial. Any reductions in reliefs would be particularly damaging to the sector, leading to cashflow shortages and potential cost cutting initiatives such as layoffs. Any changes that make it more challenging to make a claim will be hugely unwelcome. Conversely, an increase in the tax benefit would be a significant positive to the industry, encouraging greater innovation and investment, and in turn, benefitting the wider UK economy.

“Our recent survey shows that the tech industry relies heavily on the R&D regime, with 99% of tech businesses submitting a claim in the last 12 months. While our findings suggest HMRC is processing R&D claims quicker than last year, some tech businesses are still facing difficulties. Nearly a third (32%) submitted a claim which was approved, but later challenged by HMRC resulting in a repayment, while 26% submitted a claim that was challenged by HMRC but later approved. This highlights there is more work to be done to ensure the regime is accessible, or businesses may be put off making a claim.

“There’s a growing skills gap in tech which continues to weigh on the UK’s competitiveness compared to tech giants in the US. We need to see deep investment in education around the right tech skills including artificial intelligence, which continues to dominate the sector, and other key areas such as quantum and Greentech. More needs to be done to make the UK an attractive place to work so we can attract and retain the best and brightest global talent. The UK’s high tax burden, and the prospect of even higher taxes coming in the budget, will have the opposite effect.

“The rumoured cap on salary sacrifice pension schemes could reduce the pay packages required to secure the best talent. Skilled tech workers tend to be higher rate taxpayers, so are likely to be hit by any tax on wealth. Not only does this risk skilled tech workers looking outside the UK for more favourable tax rates, but it will also make it harder to encourage an inflow of global talent. Changes to immigration policy in the UK over the past 18 months such as the increase in salary threshold for a skilled worker visa haven’t helped - skilled tech migration has already fallen 10% last year, and is down 30% when compared to 2022. It needs to be a worthwhile venture for such workers to make the move to the UK, but further tax burden will only act as a deterrent.

“Last year, speculation and uncertainty surrounding changes to capital gains tax and inheritance tax had a detrimental impact on the tech sector deals market. Further changes to these taxes would hit businesses and investors looking to sell, which can really disrupt deal activity and delay processes. After all, business owners need certainty to push ahead with their plans. But with further interest rate cuts on the table, this should go some way in helping to stimulate activity.”

Related news