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Scotland remains one of UK’s biggest tech hubs

Scotland remains one of the UK’s biggest tech hubs, with the highest number of verified startups (2,442) outside of London and the South East, according to new data.

Despite the pandemic, venture capital rounds increased in 2020 to 96 against 87 in 2019.

Scottish startups raised a collective £345 million in venture capital funding, says Tech Nation, the growth platform for tech companies and leaders, and job search engine Adzuna.

Last year two Scottish startups were named among the 10 winners of UK-wide growth platform Tech Nation’s Rising Stars programme.

Edinburgh’s tech for good firm Neatebox, which harnesses tech to help disabled people in their day-to-day lives, and Glasgow-based Talking Medicines, which provides pharmaceutical companies with real-time data intelligence, received a support package to help them scale, grow and build their networks.

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Startups and fast-growing scaleups raised significant rounds during the year, including biotech firm Roslin Technologies which raised £50m in early VC funding in July, rocket company Skyrora which raised £25.5m in Series A funding in January and cryptocurrency wallet and payments platform, Zumo, which raised a £10m Series A round in November.

Scottish companies secured £235m in tax relief from the UK government for research and development projects in 2018/19.

As of December, there were 28,295 job vacancies in Scotland, 4,414 of which are in IT-related roles. In Edinburgh, 31% of all job roles are in the tech sector, making it the city’s fastest-growing sector.

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The figures on the growth of Scotland’s tech industry are published as the Government’s Digital Economy Council and Tech Nation prepare to host a digital roundtable today (3 February) to discuss the challenges facing the tech sector as it works to create jobs and help the region recover from the impact of the coronavirus.

The increased demand for skilled tech talent across the country is reflected in the high advertised salaries for open jobs. In Edinburgh, the average advertised salary for tech jobs is £59,776, ahead of the UK average of £53,945.

Advertised salaries are even higher for specialist workers including solutions architects, who are tasked with testing, integrating and programming software systems to suit a company’s needs, who can command a salary of around £69,532, a 20.7% increase from 2019’s figures.

Product managers can expect an average advertised salary of £64,054, an increase of nearly 30% from 2019 figures. There are 84 product manager vacancies across the city.

The UK Government has committed £300m to Edinburgh and the South East of Scotland to help unlock economic growth and boost jobs. This includes the creation of five innovation hubs in fields such as robotics and space technologies. A further £13 million of investment in six science centres across the UK includes Dundee and Glasgow.

And, as part of the AI Sector Deal, the UK Government provided £30m of funding for the University of Edinburgh’s Bayes Centre to help support the development of world leading technology, attract further investment to the region and support high value jobs for the future.

This week’s virtual roundtable is one of a series being held with tech executives, investors and entrepreneurs across the country. Local companies, investors, university representatives and other ecosystem participants will be brought together to learn, share and collaborate on the challenges posed by the pandemic. This will be fed back to the DCMS (Department for Digital, Culture, Media and Sport).

Minister for Digital, Caroline Dinenage said: “Scotland’s flourishing tech scene not only attracts investment from global companies such as Amazon and Rockstar Games but is also a production line for stellar homegrown firms including Skyscanner and FanDuel.

The UK government has invested in skills, infrastructure, and research and development to create the right business environment for this success, and I am delighted to join entrepreneurs, investors and local stakeholders to celebrate its resilience throughout the pandemic.”

Dr George Windsor, head of insights at Tech Nation said: “From its roots in the electronics industry, Scotland’s tech scene has evolved into a dynamic sector, encompassing everything from space to biotech and fintech. With more companies competing for skilled staff, it’s an opportune moment to meet with local entrepreneurs to hear what needs to be done to support this growing tech hub.”

Rachel Jones, founder and CEO at SnapDragon said: “Edinburgh is a brilliant place to set up a tech company. With an eclectic and international workforce on tap and easy access to businesses at home and across Europe, we’ve been able to beta test our product and prove a need for affordable, effective, brand protection technology.

“In the past few months, we’ve grown the team including hiring a new COO, and are looking forward to further expansion in 2021.”

Alan Thompson, head of government affairs at Skyrora said: “Scotland’s spaceflight sector is developing rapidly, advancing at a much faster rate than anywhere else in the UK.

“With Scotland’s space sector estimated to be of value of £4 billion by 2030, along with an array of potential spaceport locations to support polar orbital launch, Skyrora is advantageously positioned in Edinburgh.

“Our team has been working hard on our developmental programme and we will continue to grow, develop and learn with the aim of launching the Skyrora XL orbital launch vehicle by 2030.”

By Terry Murden

Source: Daily Business Group

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Business owners facing a taxing 2021: What do you need to know

Owner-managed businesses, the backbone of the UK economy, have come through a tough year. And whilst the valued furlough scheme has been extended through to April, a Spring Budget scheduled for 3 March is likely to herald change and challenges, says accountants Mercer & Hole.

The accountants point to four tax changes that every fast-growing business may have to face.

Capital gains tax

The Office for Tax Simplification (OTS) recommendations on reform of capital gains tax (CGT) have been well-publicised and are likely to result in closer alignment with rates of income tax. That could see business owners looking to sell facing a CGT bill more than double the current rates. But when might the government adopt the OTS proposals, asked Jacqui Gudgion?

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“It is widely expected that the Chancellor will announce changes to capital gains tax in his Spring budget. If changes take immediate effect, that could mean that if a business owner has not already started a business sale, they are unlikely to get such a deal over the line before the tax rates increase.

“But the UK economy is far from out of the woods yet with regards to COVID-19. The furlough scheme has been extended until the end of April and the moratorium on winding-up petitions has been extended until March 2021. Questions are being asked whether Spring 2021 is too soon for such a fundamental change. Change will come, but the big question is when.”

Business Property Relief

On 29 January 2020, the All-party Parliamentary Group (APPG) reviewing inheritance and intergenerational fairness published an informal report on reform of inheritance tax (IHT), following two reports from the Office of Tax simplification on the same matter. The direction of travel is focused on reducing the complexity in the system – a myriad of available reliefs are available but some view these are being outdated. One key relief under fire is business property relief which enables families to pass assets such as trading company shares to others free of inheritance tax.

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“This could have a significant impact on succession planning, particularly within family-owned businesses,” explains Jacqui. “If the relief is completely abolished there is likely to be more relaxed payment terms for any tax arising, but will this result in an erosion on value of entrepreneurial businesses by creating a ‘dry tax charge’ – a tax bill where no cash has been realised to pay it?

“We can only wait and see what comes out of the review and what this means for business owners.”

Off-payroll working

The government’s much criticised off-payroll working rules will finally take effect from 6 April 2021 for medium and large businesses. Personal services companies may quickly fall out of favour, says Jacqui Gudgion.

“Personal service companies are commonly used in the technology sector by contractors often working on long-term engagements, and by television and media personalities. HMRC has long taken a dim view of personal service companies, believing that contractors are employees in all but name.

“The decision will now rest with businesses rather than personal service companies on the true nature of that relationship. In many cases, the tax advantages currently enjoyed may come to an end and many may choose to abandon their personal service companies. Businesses that employ contractors through personal service companies may also find the new regime increases their costs of engagement along with the inherent risk of making the wrong judgment call and resulting fines from HMRC.

“Companies are advised to address this issue sooner rather than later if they may be affected.”

Caps on R&D tax relief

R&D tax credits are a valuable relief for qualifying businesses, but from 2021 they may be less so for some businesses, says Jacqui Gudgion.

“Under the current rules, qualifying businesses can claim up to 230% of research and development expenditure either as a cash payment or a reduction in corporation tax. From April next year, small and medium sized businesses will only be able to claim £20,000 plus 300% of its PAYE and NIC liabilities over the qualifying period. For many businesses this cap on relief will have no impact, but for some there may need to be some consideration of the business model and whether the new rules will bite.”

Posted by: Barney Cotton

Source: Business Leader

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