Powering the AI Boom in the UK

December 18, 2023

The Chancellor’s Autumn Statement signalled a commitment to boost the journey for the UK to become an ‘AI Powerhouse’. The announcement of an additional £500 million of investment will help to further propel the incredible work already being done in the AI sector and will no doubt unlock further opportunities for smaller companies working in the tech space.

Further to Jeremy Hunt’s announcement, Microsoft have committed to spend £2.5 billion over the next 3 years to expand its next generation AI datacentre infrastructure, bringing more than 20,000 Graphics Processing Units to the UK by 20026.

This is a welcome vote of confidence for the UK technology sector.

Companies in this space can further maximise their innovation by taking advantage of the tax incentives available to them.


Energy Use and AI

Not only did the popularity of artificial intelligence surge in 2023, but the energy used to power generative AI technology surged too. AI applications demand more power than conventional software and will be pushing more tech businesses into the energy intensive bracket.

Studies from Amsterdam’s School of Business and Economics predict that by 2027, the AI industry will consume the same amount of energy as a country the size of the Netherlands.  


R&D Tax Credits

Start-ups and smaller companies often play a vital role in driving AI innovation; however, financial challenges can be a barrier to success. AI research and development is costly. It requires attracting and hiring the brightest minds, using the latest technology and often requires moving quickly to stay competitive. 

UK R&D tax credits can allow businesses to offset costs and receive either a lump sum or a significantly reduced corporation tax bill, helping them to grow and re-invest into their AI projects.

The process of applying for Research and Development tax credits can be tricky to navigate. If you are new to the legalisation, it can be especially challenging to cut through the noise and understand the eligibility requirements.


Innovate UK Grants

Innovation is at the centre of the AI industry, with businesses developing new solutions, algorithms, and software improvements to stay ahead of the competition. Innovate UK is a government funded business grant to provide capital and connect businesses with key partners to assist them with starting and growing a business that is pushing innovation in the UK.

Businesses that are developing products, processes or services using science and technology can potentially access a pot of money ringfenced for those businesses that have potential to boost economy growth in the UK. The grant can be used for labour costs, overheads, materials, capital assets and some other costs such as travel, legal fees and training. However, businesses must make a strong case for how the grant money will be used in their application and not all business costs we be eligible.

The grants require a lot of time, and the application process can be long-winded and not as straightforward as a business would hope it to be. 


Help Obtaining Funding or Tax Benefits

When running your company or using your expertise is your priority, it can help to have an expert guide you through the process of applying for the various tax incentives and reliefs available. This way you can focus on what you do best and let those with the experience make your applications and handle all the paperwork.

For more information or to learn what tax benefits or grants your tech company could be eligible for, we would be happy to speak over the phone or arrange a meeting with you.

Call Bonham & Brook on 020 3523 9125 or email info@bonhamandbrook.co.uk

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