On 29 October, the Chancellor Philip Hammond announced the 2018 Autumn Budget, proclaiming that austerity is coming to an end. Amongst largely popular news that duties on beer, cider and spirits are due to be frozen and personal tax thresholds are to rise from £11,850 to £12,500 in April 2019, there was also an update on a new digital services tax (DST).

Ahead of the Budget, there was a lot of talk about DST, which had some online retailers worried about their position in the market. However, what was announced on Monday will only apply to businesses that generate large global revenue, tackling a longstanding criticism of that big tech companies don’t pay appropriate business tax in the UK.

DST, which is due to come into effect from April 2020 will be a 2% tax on the sales of search engines, social media platforms and online marketplaces that are profitable, and generate more than £500 million per year in global revenue. It is being predicted by 2023, DST will boost the Treasury’s coffers by over £400 million per year.

Commenting on the initiative, Tech Nation CEO Gerard Grech said: “We have heard assurances that the new tax will not be a crude digital sales tax and will not impact smaller digital platforms. But tech start-ups and entrepreneurs can be forgiven for feeling that they could still end up in the sights of future Chancellors. We do not want to risk being left behind in a global race by moving out of step with other countries in this area.”

While not denying the concerns of Mr Grech, the Chancellor was adamant that DST will not negatively impact UK tech start-ups.

Aside from the DST, the Chancellor also announced a series of investments into digital tools to support the tech industry, including a £20 million fund for local peer-to-peer networks geared towards business improvement and technological adoption.

The Chancellor also committed to a further £1.6 billion injection next year into R&D in areas including quantum computing, artificial intelligence and nuclear fusion.

The Budget also set out a handful of ways that the government may use AI to drive growth, including a review into the use of automation and data in the public sector conducted by the Government Digital Service (GDS) and the Office for AI.

Technology businesses and the use of technology was very much at the heart of the Autumn Budget, which I think reflects the status and importance of both to the UK’s economy.


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