The last year has been tough for the UK economy and there remains a lot of uncertainty about the country’s position once the Brexit transition period ends, regardless of whether a deal is done or not.
It is hard to deny that many sectors have been badly affected by the events of COVID-19, in particular, the hospitality, retail and tourism sectors.
However, 2020 wasn’t a bad year for every industry and for tech the last 12 months demonstrated the importance of the UK for this global sector.
According to The State of European Tech report, from venture capital firm Atomico, tech firms in the UK attracted capital funding worth around £37.4 billion within the last five years – including more than £9.3 billion in finance in the last 12 months.
Despite the uncertainty regarding Brexit and the Coronavirus pandemic, the report shows that investment in tech start-ups in Britain in 2020 was double the amount raised by its European counterparts in places like Germany and France.
Although other parts of the UK are seeing increasing investment in tech, London remains the primary tech hub when it comes to the amount of capital invested, attracting £7 million in 2020.
Paris was Europe’s second-largest tech hub, attracting £2.5 billion of investment this year – around 35 per cent less than London.
There are several key factors why so many tech businesses chose the UK, and London in particular, as a hub for their new enterprise.
Chief among these is the ease by which new businesses can be created and formed. This is particularly true of the Companies House process for setting up a Limited Company, often referred to as incorporation, which is quick and provides entrepreneurs protection against a number of liabilities, should their business falter or fail.
This does, of course, come with legal obligations, under the Companies House rules, such as the preparation of annual accounts and a register of people of significant interest, but it is still far simpler than many company formation procedures elsewhere in the world.
Secondly, for the tech sector, the UK’s generous R&D tax credit system provides businesses with a useful source of funding and tax relief to cover their qualifying development expenditure.
The tax regime in general in the UK remains fairly supportive of start-ups with a low rate of Corporation Tax and various reliefs and allowances aimed specifically at new businesses.
Thirdly, the UK has become a hub for tech talent in Europe. While there are fears that some may leave the country due to new visa and immigration requirements post-Brexit, at this time that hasn’t been the case.
In fact, the new points-based immigration service introduced by the Government has been specifically designed so that businesses can retain the technical knowledge and skills in the UK that are essential to the tech and scientific sectors.
Regardless of the current events, the UK continues to offer an excellent base from which to operate a tech start-up, which is why so much funding continues to be sought by new enterprises across the nation.
Our team work with a wide range of tech companies, helping them from start-up, through to funding and scale-up, as well as assisting with eventual exits and mergers.