The UK Labour Party’s election manifesto outlines ambitious plans for enhancing the National Health Service (NHS) through technology and supporting the green energy transition. However, it lacks detailed policies specifically aimed at the UK startup sector. As Labour leads in the polls ahead of the upcoming election, their manifesto is seen as a potential blueprint for the next UK government.
Key Policies Affecting Startup Funding
Support for Startups and Innovation
Although the term ‘startup’ is mentioned only once, Labour’s manifesto proposes maintaining the current R&D tax credit scheme, which has been crucial for startups since its inception in 2000. The scheme allows founders to claim back part of their R&D expenses as tax relief or cash credit. Labour plans to retain a permanent full expensing system for capital investment and the annual investment allowance for small businesses, which is vital for new ventures.
Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS)
Investment schemes like SEIS and EIS, which offer tax breaks to investors supporting new companies, are not explicitly detailed in the manifesto. However, Labour has previously committed to protecting the EIS, ensuring continued support for SEIS investment and other startup funding opportunities.
Carried Interest Taxation
A significant concern for venture capitalists is Labour’s proposal to increase taxes on carried interest, a performance-based fee for general partners managing funds. This change could potentially impact the attractiveness of the UK as a destination for investment funds, raising £565 million by closing this tax loophole.
National Wealth Fund
Labour plans to establish a National Wealth Fund, investing £7.3 billion into critical sectors like ports, supply chains, gigafactories, and green hydrogen manufacturing over the next parliament. This fund aims to attract private investment, creating jobs and stimulating economic growth.
Spinouts and University Collaboration
Labour intends to support university spinouts by improving access to funding and encouraging universities to offer spinouts a ‘founder-track’ option. This initiative aims to boost innovation and commercialisation of academic research.
Investing in Climate Tech
Labour’s manifesto emphasises a significant push towards renewable energy, aiming to double onshore wind, triple solar power, and quadruple offshore wind by 2030. Startup funding and investments in carbon capture, hydrogen, and marine energy are also highlighted, presenting opportunities for startups in the green tech sector.
Tech for the NHS
Labour plans to leverage AI to enhance diagnostic services in the NHS, focusing on prevention and innovation. They propose an NHS innovation and adoption strategy to streamline procurement processes, driving faster adoption of new technologies and medicines.
Improving Regulation
A new Regulatory Innovation Office is proposed to update regulations and expedite approval timelines, supporting the development of AI, open banking, and open finance technologies.
Conclusion
While Labour’s manifesto is light on specifics for startups, it outlines a broad vision that includes maintaining vital tax reliefs and encouraging innovation across various sectors. Startups, particularly those in tech and green energy, may find significant opportunities if Labour’s plans come to fruition. BSO-Fintax remains committed to helping startups navigate these changes, providing expert guidance and tailored financial solutions to thrive in this evolving landscape.
