Business

UK tech sector prepares for Autumn Budget amid innovation and security challenges

Monday, 24 November 2025 11:15AM UTC

As the UK gears up for the Autumn Budget, tech leaders express cautious optimism, highlighting the importance of R&D tax reliefs, skills development, and cybersecurity investments to sustain the nation's competitive edge in AI, quantum computing, and clean energy.

UK tech leaders are approaching the forthcoming Autumn Budget with a blend of optimism and concern, recognising the budget's crucial role in shaping the sector’s trajectory. Central to this is the reliance on research and development (R&D) tax reliefs, with Ben Bilsland of RSM UK highlighting that an overwhelming 99% of tech businesses submitted claims in the past year. This tax relief regime forms the backbone of financing for innovation in the tech industry, and any reduction could severely disrupt cashflow, potentially forcing layoffs and stalling development. Yet, challenges persist in the interaction with HMRC; RSM UK’s survey revealed that over a third of companies had claims initially accepted then questioned, resulting in repayments, while another quarter faced preliminary scrutiny before approval. This points to a pressing need for a more accessible and less intimidating R&D claims process to encourage sustained innovation and prevent companies from hesitating to file claims.

The UK government’s Digital and Technologies Sector Plan outlines an ambitious vision to propel the tech sector to a £1 trillion valuation, underpinned by advances in artificial intelligence (AI), quantum computing, and cybersecurity. It emphasises public-private collaboration to improve infrastructure and skills, with cities like Manchester and Bristol identified as emerging tech locales. However, these goals face hurdles, notably a widening skills gap that threatens the UK's global competitiveness. Bilsland notes that the UK lags behind large American companies in AI, quantum, and green technology skills, compounded by a tax regime and immigration policies that may deter talent from relocating to or staying in the country. Recent data underscores this concern; skilled migration fell by 10% last year and by nearly 30% compared to 2022, influenced in part by higher salary thresholds for skilled worker visas and potential limits on salary sacrifice pension schemes, which could weaken compensation packages.

On the investment front, uncertainty looms. Previous speculation around capital gains and inheritance tax increases dampened dealmaking, with investors and founders adopting a cautious stance. Expectations that the Autumn Budget might introduce further tax pressures fuel fears that deal activity could slow once again, although the potential for interest rate cuts could offer some reprieve. Government documents also recognise external pressures including geopolitical tensions and the imperatives of sustainability, highlighting opportunities for AI-driven advancements in sectors like healthcare, finance, and energy. Maintaining steady investment in these areas remains critical.

Cybersecurity emerges as a vital theme in the broader economic context. Will Benton, Regional Vice President EMEA at Trustwave, warns of a profound and immediate threat to the UK economy posed by cyberattacks, citing recent breaches at companies like Marks & Spencer and Jaguar Land Rover that have caused substantial financial damage. Benton stresses the need for increased government investment in digital defences, clearer guidance from the National Cyber Security Centre (NCSC) on robust cyber resilience practices, and enhanced public-private sector collaboration to implement effective regulations. The upcoming budget offers an important opportunity for the government to reinforce the UK's cyber defences in line with its economic ambitions.

Contrasting with headlines blaming AI for a recent rise in the UK’s unemployment rate, Pedro Varela, Head of AI at Slalom, presents a more nuanced perspective. While acknowledging AI’s transformative impact on the labour market, Varela points out that AI is also creating new jobs faster than it eliminates them. Data from Slalom indicates that 64% of UK and Ireland organisations are either developing or planning AI-related roles, reflecting a growing demand for upskilling and reskilling to meet evolving needs. However, Varela cautions that AI literacy must continuously evolve given the rapid pace of tech change, and without stronger collaboration between government, educators, and business, the UK risks falling behind in the global AI race. The Autumn Budget will be closely watched for its signals on support for AI skill development, innovation funding, and strategic partnerships.

Complementing these concerns, recent government initiatives underscore a commitment to advancing frontier technologies. A £1 billion investment plan aims to support innovation in quantum computing, engineering biology, and semiconductors, reinforcing the UK’s ambition as a global tech leader. In the cybersecurity sector, a newly announced Cyber Growth Action Plan allocates up to £16 million to accelerate the development of innovative startups and strengthen national cyber capabilities. Industry data from PwC further reflects a prioritisation of cybersecurity and AI, with 85% of UK businesses planning to boost cybersecurity budgets in 2026 and 61% investing in AI upskilling within the next year, signalling strong market momentum towards these priorities.

Internationally, the UK and the US have recently agreed on a substantial £31 billion "Tech Prosperity Deal" aimed at deepening cooperation in AI, quantum computing, and civil nuclear energy. Leading American tech companies, including Microsoft and Nvidia, have committed significant investments in the UK, enhancing its position within the global technology arena.

Lastly, a broader industrial strategy focussing on clean energy and advanced manufacturing, backed by billions in R&D investment, complements the tech sector’s ambitions. This ten-year plan aims to lower energy costs for businesses and scale clean energy investments, reflecting the government's recognition that sustainability and innovation go hand in hand.

In sum, the UK's tech ecosystem stands at a pivotal moment. The Autumn Budget will be scrutinised not just for fiscal measures, but as a barometer of the government's commitment to nurturing innovation, addressing skill shortages, securing critical infrastructure, and maintaining global competitiveness in an era increasingly defined by AI and cybersecurity challenges.

📌 Reference Map:

^[1] (TechRound) - Paragraphs 1, 2, 3, 4, 5, 6, 7
^[2] (RSM UK) - Paragraph 1, Paragraph 2
^[3] (UK Government) - Paragraph 8
^[4] (UK Government) - Paragraph 8
^[5] (PwC) - Paragraph 8
^[6] (Reuters) - Paragraph 9
^[7] (Reuters) - Paragraph 10

Source: Noah Wire Services

More on this

https://techround.co.uk/tech/what-do-tech-startups-need-to-know-ahead-of-the-autumn-budget-2025/ - Please view link - unable to able to access data
https://www.rsmuk.com/news/inability-to-access-rd-reliefs-will-hamper-tech-growth - RSM UK highlights that over a third of technology businesses face challenges with HMRC when claiming Research and Development (R&D) tax reliefs, leading to repayments or claim rejections. This scrutiny, particularly on SMEs, may deter legitimate claims and hinder innovation. The firm urges for a more accessible R&D relief process to support tech growth.
https://www.gov.uk/government/news/tech-innovators-backed-to-set-up-and-scale-up-in-britain-through-industrial-strategy - The UK government has unveiled a £1 billion investment plan to support tech innovators, focusing on quantum computing, semiconductors, and engineering biology. The initiative aims to establish the UK as a global leader in these frontier technologies, with significant funding allocated to accelerate their development and application.
https://www.gov.uk/government/news/new-plans-to-supercharge-uk-cyber-sector - The UK government has announced a Cyber Growth Action Plan to boost the £13.2 billion cyber sector. The plan includes up to £16 million in new funding to support cyber startups and turn cutting-edge innovations into new businesses, aiming to strengthen the UK's cybersecurity capabilities and foster innovation.
https://www.pwc.co.uk/press-room/press-releases/research-commentary/2025/ai-and-cybersecurity-investment-surge-to-the-top-of-uk-boardroom.html - A PwC survey reveals that 85% of UK businesses plan to increase their cybersecurity budgets in 2026, with over half expecting a rise of more than 6%. Additionally, 61% of businesses aim to invest in AI upskilling over the next 12 months, highlighting a significant shift towards prioritising AI and cybersecurity investments.
https://www.reuters.com/world/uk/uk-us-agree-42-billion-tech-pact-mark-trumps-visit-2025-09-16/ - The UK and the US have agreed on a £31 billion 'Tech Prosperity Deal' to enhance collaboration in AI, quantum computing, and civil nuclear energy. Major US tech firms, including Microsoft and Nvidia, have pledged significant investments in the UK, aiming to bolster the country's position in the global tech landscape.
https://www.reuters.com/sustainability/climate-energy/uk-backs-advanced-manufacturing-clean-energy-ten-year-industrial-plan-2025-06-23/ - The UK government has unveiled a ten-year industrial strategy focusing on advanced manufacturing and clean energy. The plan includes up to £2.8 billion in R&D investment to spur innovation and automation, aiming to reduce electricity costs for businesses and double clean energy investments to over £30 billion annually by 2035.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative appears to be original, with no evidence of prior publication. The earliest known publication date of similar content is November 24, 2025. The article includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. The narrative is based on a press release, which typically warrants a high freshness score. However, if earlier versions show different figures, dates, or quotes, these discrepancies should be flagged. If anything similar has appeared more than 7 days earlier, this should be highlighted explicitly. If the article includes updated data but recycles older material, mention that the update may justify a higher freshness score but should still be flagged.

Quotes check

Score: 9

Notes: The direct quotes from Ben Bilsland of RSM UK and other individuals are not found in earlier material, suggesting they are original or exclusive content. No identical quotes appear in earlier material, which is a positive sign. If quote wording varies, note the differences. If no online matches are found, raise the score but flag as potentially original or exclusive content.

Source reliability

Score: 7

Notes: The narrative originates from TechRound, a UK-based publication. While TechRound is a known platform, it is not as widely recognised as major outlets like the Financial Times or BBC. This raises some uncertainty about the source's reliability. If the narrative originates from an obscure, unverifiable, or single-outlet narrative, flag the uncertainty. If a person, organisation, or company mentioned in the report cannot be verified online (e.g., no public presence, records, or legitimate website), flag as potentially fabricated.

Plausability check

Score: 8

Notes: The claims about the UK's tech sector, R&D tax reliefs, and the Digital and Technologies Sector Plan align with known government initiatives and industry concerns. However, the article lacks supporting detail from other reputable outlets, which is a concern. If the narrative lacks supporting detail from any other reputable outlet, flag this clearly. If the report lacks specific factual anchors (e.g., names, institutions, dates), reduce the score and flag as potentially synthetic. If language or tone feels inconsistent with the region or topic—e.g., strange phrasing, wrong spelling variant—flag as suspicious. If the structure includes excessive or off-topic detail unrelated to the claim, note this as a possible distraction tactic. If the tone is unusually dramatic, vague, or doesn’t resemble typical corporate or official language, flag for further scrutiny.

Overall assessment

Verdict (FAIL, OPEN, PASS): OPEN

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary: The narrative presents original quotes and aligns with known industry concerns and government initiatives. However, the reliance on a single source with limited external corroboration and the lack of supporting detail from other reputable outlets raise concerns about its reliability. Further verification from additional reputable sources is recommended to confirm the accuracy and credibility of the information presented.

UK Tech Industry
Autumn Budget
Innovation