Technology is now the core driver of growth in most developed countries. In the UK, startups and multinational companies are new opportunities in the burgeoning digital sector. The capital-light and easy distribution of digital technologies has helped create some of the fastest growing companies in the country.
In 2016, Britain’s digital economy generated nearly £161 billion in revenue and employed more than 1.5 million people. The digital sector is now growing at a much faster rate than the general economy. Soon, digital products and services will form the bedrock of the British economy, becoming the nation’s primary export to the rest of the world. In other words, technology will help Britain remain a prominent economic power post-Brexit.
However, Britain’s digital economy hasn’t developed by accident. Access to capital, tech-savvy consumers, a rich talent pool, and government support have helped push the country into the digital big leagues. Of the aforementioned advantages, government support seems to be the most crucial.
According to a report by Mastercard and The Fletcher School at Tufts University, the UK is part of an elite group of standout countries with exceptionally well-developed digital economies. The British government has played a key role in this development.
While most people believe innovation is only truly possible when government “gets out of the way”, the countries on top of the Digital Evolution Index have the most government support. The British government has offered incentives to startups, tax credits to big enterprises, incubators for bright entrepreneurs, and digital services to citizens. These incentive programs have helped the UK leap ahead of other countries to create a sophisticated, tech-driven economy.
The government’s R&D Tax Credits scheme has played an essential role in the digital economy. By offering direct tax credits to businesses of all sizes for investments in research and development, the government has incentivized innovation. This scheme acts as a catalyst for technical investments and long-term research. Businesses can apply resources to experimental and groundbreaking new products, techniques, and services while mitigating their tax liabilities.
Companies can leverage this scheme regardless of profitability or sector. Professional platforms like Tax Cloud help startups and SMEs access a pool of tax experts to make their claims. Since the launch of this program, thousands of businesses have benefited from these tax credits, with small startups and digital companies gaining the most.
The UK government continues to push the economy towards a digital future. Tax incentives have already helped create a hub for tech startups in the heart of London. Government policies have attracted global tech giants such as Google and Amazon to the city. Last year, the government announced a £400 million digital infrastructure fund that will help bring broadband and digital services to millions of people across the country.
However, the government’s expanded R&D tax credits program will continue to play an essential role in the economy by boosting innovation directly.