How is the technology sector impacted? – Autumn Budget 2026

 
The technology sector was always likely to feature prominently in this year’s Budget. With AI, digital infrastructure and innovation playing a key role in the Government’s plans for economic growth, businesses were keen to see how the Chancellor would build on the support already announced over the past 12 months.

For technology businesses, the Budget focuses on four main areas: investment in AI and emerging technologies, support for founders, enhancements to employee share schemes and making it easier to claim R&D tax relief.

Continued commitment to AI and advanced technologies

The Chancellor used the Budget to reinforce the Government’s commitment to artificial intelligence, advanced computing and digital infrastructure, recognising the sector’s importance in driving future productivity, investment and economic growth.

This builds on significant investments already announced during the year, including funding for AI infrastructure, semiconductor development and computing capability. For technology businesses, it is another indication that AI and digital technologies remain at the heart of the Government’s growth agenda

New Founders’ Relief announced

One of the headline announcements for entrepreneurs was the introduction of a new Founders’ Relief.

From 6 April 2027, founders of qualifying high-growth and innovative businesses will be able to benefit from a 10% Capital Gains Tax rate on up to £10 million of lifetime gains, subject to meeting the relevant qualifying conditions.

At the same time, the lifetime limit for Business Asset Disposal Relief (BADR) will be reduced from £1 million to £500,000.

For technology founders, whose rewards often come through a future sale, the new relief is likely to be welcomed. It also reflects the Government’s desire to encourage entrepreneurs to start, scale and ultimately realise value from businesses in the UK.

Further enhancements to employee share schemes

Attracting and retaining talented employees remains a challenge for many growing technology businesses, particularly where larger employers can offer higher salaries.

The Budget includes a number of changes to employee share schemes. From 6 April 2027, the individual limit under the Company Share Option Plan (CSOP) will increase to £120,000 and the exercise period will be extended to 15 years. The Enterprise Management Incentive (EMI) regime will also become more flexible, with changes to the treatment of certain disqualifying events and simplification of some administrative requirements.

These changes should give growing businesses greater flexibility when designing reward packages and incentivising key employees over the longer term.

Simplifying the R&D claims process

After several years of change within the R&D tax relief regime, many businesses will be pleased that the focus has shifted towards simplification.

For R&D claims made on or after 1 April 2027, the Claim Notification Form will be abolished. In addition, the Additional Information Form will be simplified from autumn 2027.

The changes will not increase the amount of relief available, but they should make the process of claiming less time-consuming and reduce some of the administrative burden associated with R&D claims.

Support for international recruitment

The sector’s demand for specialist skills continues to outstrip supply in a number of areas.

The Government has confirmed that employer-funded certificate of sponsorship fees and immigration skills charges paid under the Skilled Worker route will be exempt from income tax from 28 October 2026.

Whilst relatively narrow in scope, the measure recognises that many technology businesses continue to rely on international recruitment to access specialist expertise.

Conclusion

Although the Budget does not contain any major new technology-specific tax incentives, it does contain several measures aimed at supporting growth and innovation. The continued backing of AI and digital technologies, the introduction of Founders’ Relief, improvements to share incentive schemes and the simplification of R&D claims all point in the same direction.

Technology businesses should now take the opportunity to review their growth plans, employee reward structures and future exit strategies to determine whether they can benefit from the changes announced.

If the Budget has raised any questions for you, book your place on our question time webinar this Friday at 9:30am. Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.