Hope for Dundee as innovation likely to figure high in Rishi’s recovery plans

Andrew McMillan

Andrew McMillan

Tax Partner & Head of Innovation Taxes

After spending £280bn on the government’s response to the pandemic and pledging a further £55bn this year there is no doubt that Rishi Sunak will be looking to plug the funding gap. 

Dominating the headlines has been the introduction of levies or taxes that will target the industries that have done well out of COVID-19, such as online retailers and the supermarkets. 

But he will also have an eye on recovery and supporting high growth industries, such as the life sciences and technology sectors, which are thriving here in Dundee, is likely to be high up on his list.  

Coronavirus has shown us all the importance of innovation. The UK has played a leading role in the COVID vaccine race with Oxford’s AstraZeneca being among the success stories. Simplifying and broadening the existing R&D reliefs would support ongoing vaccine development whilst helping to secure and create jobs in the wider technology sector.  

Here in Tayside, we have our very own showcase for the positive impact that R&D tax relief can have on innovative businesses.  

Founded eight years ago, Invergowrie-based Intelligent Growth Solutions (IGS) has benefited from R&D tax relief in undertaking the development of its incredible vertical farming technologies. The relief received allowed the Company to invest more heavily than would otherwise have been possible during the early development phases, and the business is now starting to export its technologies worldwide.   

Enhancing the tax reliefs available for such companies could help place the UK at the forefront of the clean energy and green technologies agenda, which the Prime Minister has recently earmarked as a key pillar for UK growth in the coming years.   

Another key sector local to Dundee, and growing nationally, is video games development. It might not be on the Chancellor’s agenda this time around, but it would be positive to see the government bolstering support for an already successful industry by enhancing the Creative industry Tax Reliefs, which include Video Games Tax Relief.   

Many video games companies have enjoyed a record year of sales, with fans spending more than ever on content to entertain them during lockdown. Dundee has a long history of producing some of the most innovative and successful games companies in the world, with the likes of  4J Studios, Outplay Entertainment and Tag Games still present and flourishing in the city.  However, even these successful companies had to start somewhere, and boosting the relief available for early-stage video games development companies could help to continue the pipeline of world leading content produced by UK games companies.  

Maintaining and even relaxing the rules surrounding venture capital schemes such as the Enterprise Investment Scheme (EIS) and the Seed Enterprise Scheme (SEIS), which allow early-stage risky businesses to secure finance, would be a major boost. Start-ups are the bedrock of our economy and we need to take every step possible to help them thrive. 

Hospitality is a key contributor to the local economy and has been amongst the industries hit hardest over the past year. Incentives that encourage people to spend their money, similar to the Eat Out to Help Out scheme introduced last year would get people back to work and visiting our bars, restaurants and shops. The current VAT reduction for tourism and hospitality is likely be extended for the remainder of the year. 

It’s unquestionable that small businesses have been adversely affected in the last 12 months. Offering tax relief for sole trading and small businesses would certainly be welcomed by all, to encourage entrepreneurship and increase the chances of longer-term success for the self-employed. 

Rishi Sunak has a fine line to tread. On the one hand he needs to generate much-needed revenue for the Treasury and on the other, he must also encourage consumers to start spending again. While the Budget can’t and won’t please everyone, there is a glimmer of hope at the end of a long and dark tunnel for Dundee and beyond.