After many weeks of uncertainty from the UK’s startup ecosystem, and rumours of what would be announced we take a look at the key measures outlined that will impact startups and the technology industry in the UK?

Building in the UK

“If you build here, we will back you,” said the chancellor. The chancellor announced several steps aimed at helping scaleups, after concerns that many businesses fail to find enough funding to scale beyond their early stages, and either close or leave the UK for better opportunities.

Tax incentives for young, innovative companies are effective in supporting startups, but existing limits in some schemes restrict their availability to scaling companies. The government has announced a package of tax changes to support scaling companies in attracting investment and talent.

The government has increased company eligibility limits for the Enterprise Management Incentives scheme (EMI) so scaleups can join startups in offering tax-advantaged shares to the talent that it needs to grow. It also increased the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) limits so investors can follow on as companies grow beyond the startup phase. To balance the amount of upfront tax relief offered by VCTs compared with the EIS, and to incentivise funds to support growing companies, the government reduces the upfront VCT Income Tax relief from 30% to 20%.

This sits alongside the government’s previous announcement allowing companies to update existing EMI and Company Share Option Plan (CSOP) contracts so employees can exercise their options at a PISCES trading event and retain access to the tax advantages. This marks a step in the launch of PISCES, and supports scaling companies in achieving liquidity, while allowing their employees to more easily access the benefits of EMI and CSOP.

The government has announced a three year exemption from stamp duty for British businesses that choose to stay and list their company on the London Stock Exchange.

It has also launched consultation on how to make support more ‘founder friendly’, and is seeking input from investors and scaleups.

Research and development

Research and development drives economic growth, with each £1 of public R&D investment returning £8 of economic benefits. Because of this, annual government investment in R&D will grow to £22.6 billion by 2029-30 and will be focused on government priorities, with UK Research and Innovation (UKRI) directing £9 billion over four years to IS-8 sectors, including £4.5 billion for innovative UK companies.

Innovate UK will launch a new Growth Catalyst programme worth £130 million, offering grants and support to companies that have already attracted investment. UKRI’s £500 million R&D Missions Accelerator programme will launch challenges to drive economic benefit from the UK’s cultural assets and to cut construction costs for public infrastructure by 10%.

UKRI will invest £4 million per year into new Enterprise Fellowships to bring 100 researchers into business around the UK. It also planned up to £25 million for new doctoral training schemes focused on entrepreneurship, and a new £4.5 million round of the Women in Innovation Awards. Closing the gap between the rate at which men and women start and grow businesses could add up to £250 billion to the UK economy.

The industry reacts

Martin Tombs, Field CTO EMEA, Qlik, commented on today’s budget announcement: “The OBR's forecast has made it clear how integral the impact of AI is to their fiscal outlook and productivity figures. Yet ambition alone will not make the UK an AI leader. Today’s Autumn Statement takes helpful steps to help firms startup, scaleup, and stay in the UK, but targeted support for AI adoption and data skills is still missing. With costs rising, businesses need clarity and reassurance before they can invest.

"The changes to enterprise incentives, investment schemes, and UK listings will help more high-growth firms expand here rather than overseas. The next step is ensuring companies have the skills and capability to apply AI effectively, so these measures translate into real economic value.

“If the UK wants to compete with the US and EU on AI, it must provide both the capital and the capability to do it. Today’s measures are a start, but the priority now is ensuring firms have the skills and certainty to turn AI into real growth.”

Andy Fishburn, Managing Director, Virgin StartUp comments: "Today’s Budget presents a mixed picture for small business owners who are working hard to build and grow their ventures across the UK. The government has made steps towards its pledge to make the UK the best place to start and grow a business by widening eligibility for scaleup programmes and the Enterprise Management Incentives (EMI) scheme, which will energise the startup industry. However, there has been little assurance for struggling businesses against some key policy areas such as VAT thresholds and the trading allowance.

“Small businesses will always be the beating heart of the UK economy and the government’s continued investment into this thriving sector is a vital lifeline for British founders. The announcement of these measures and funding for apprenticeships for SMEs today reinforces the government’s commitment to the UK’s startup economy, reassuring entrepreneurs that the UK is a great place to grow and scale their businesses.”

Alessandro Maiano, Co-Founder and CEO, deeptech fund Wilbe, reacted: “This Budget makes clear just how much responsibility taxpayers continue to carry in funding the riskiest stages of scientific discovery. With UKRI now deploying over £38.6 billion towards government priorities, including £8 billion for mission-aligned research and £7 billion for backing innovative companies, public money is again underwriting the earliest, most uncertain phases of innovation.

“If the UK wants to become a true science superpower, public investment must be complemented by far greater incentives for private individuals, philanthropists and foundations to support early scientific discovery. Without that shift, taxpayers will continue to take the risk without ever sharing in the reward.”

Tanya Suarez, CEO and Founder of IoT Tribe, said: “The Government’s AI investment plan announced earlier this week, including a £500 million Sovereign AI Unit and another £100 million to buy domestic AI hardware, is a strong commitment to the UK’s technology ecosystem. However, we’re seeing more and more UK firms head to the US to seek deeper pools of funding or to be acquired. If the UK is to achieve sustained economic growth, we must find the cash to invest in the technologies in which the UK excels. This is not a niche opportunity but a critical path to growth and key to reinvigorating a UK-wide industrial base … Although the Chancellor made important changes around the Enterprise Investment Scheme (EIS) and signalled her intent to keep the UK’s most promising scaleups on these shores, we need to see further action to really shift the dial.”

Nik Kairinos, Founder and CEO, Fountech AI, reatced: “While the lead-up to this Budget has hardly been uplifting … recent tech-focused measures at least indicate that the Chancellor is beginning to make the right sounds about supporting the UK’s tech industry.  

“But sounding supportive and being supportive are not the same. The UK tech ecosystem will only reach its full potential if business leaders can rely on broader economic stability. According to the Stanford AI Index, private investment in UK AI still significantly lags behind the US ($4.5 billion vs $109.1 billion), highlighting ongoing challenges in attracting investment, talent, and capital. The next step for policymakers should be clear: move beyond signalling and create conditions that not only support innovation today but also build sustained investor confidence, strengthen talent pipelines, and unlock the full potential of the UK’s pioneering tech sector.”

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