The UK Government’s consultation on Advance Tax Certainty for Tech and Major Investment Projects could transform how technology companies plan and deliver large-scale projects. For a sector where projects often involve heavy upfront R&D costs, long development cycles, and complex intangible assets, advance tax certainty offers a much-needed framework for clarity and risk reduction.
As UK tax advisers specialising in high-growth technology companies, we have reviewed the consultation closely. Below, we set out its key features, implications for the tech industry, and considerations for stakeholders.
Read the HMRC consultation here.
Aims of the Advance Tax Certainty Initiative
The Advance Tax Certainty for Major Investment Projects framework is designed to give businesses clarity over corporation tax before major projects begin.
This certainty helps companies plan strategically, allocate resources effectively, and reassure investors.
What is Advance Tax Certainty for Tech?
Launched on 26 March 2025, the consultation proposes binding, pre-agreed rulings on key tax issues. While initially focused on corporation tax, eligible projects may also apply for rulings on VAT and employment taxes.
This gives tech businesses the confidence to commit substantial capital by removing a major source of tax uncertainty, a core benefit of Advance Tax Certainty for Tech.
This practice, already available in other jurisdictions, would allow businesses to secure a statutory agreement with HMRC before investing—removing a key source of tax risk.
How Advance Tax Certainty for Tech Benefits Businesses?
Startups and SMEs
While the initiative targets ‘major projects,’ there are important questions about how innovative startups and high-growth SMEs might fit in. These companies face significant upfront costs in R&D and technology development, yet may not meet the proposed thresholds.
Expanding eligibility—or introducing a parallel regime for Advance Tax Certainty for Tech SMEs—would encourage innovation across the wider ecosystem.
For a sector where a large portion of value is in intangible assets, ensuring the Advance Tax Certainty for Tech framework is inclusive is paramount.
Scaling Tech Companies
Scaling SMEs are often close to eligibility thresholds but lack clarity on whether their projects qualify. Guidance and case studies would help these businesses structure investments in line with HMRC’s criteria. Leveraging existing reliefs like R&D tax credits or the Patent Box could also strengthen their case.
Established Companies
For established companies, securing Advance Tax Certainty for Tech on projects involving major digital infrastructure could significantly reduce tax risk. Large tech corporations are already well placed to benefit. For them, advance certainty on major digital infrastructure, AI platforms, or international expansion projects could significantly reduce tax risk and improve capital allocation.
Advance Tax Certainty for Tech: Unlocking Long-Term Innovation
Significant Investments, Long Horizons
Tech projects in AI, cloud, or VR often require years of development before generating returns. Certainty on tax treatment reduces risk and supports strategic planning.
The SME Threshold Challenge
Current rules risk excluding startups and scale-ups if thresholds are set too high. Making space for these smaller but innovative businesses is critical to supporting the UK’s tech economy.
Clarity for Intangible Assets
Software, algorithms, and patents are at the heart of tech businesses, but their tax treatment is often contentious. Binding certainty would reduce disputes and encourage long-term IP investment.
Complementing Existing Reliefs
This initiative is intended to complement—not replace—existing mechanisms such as R&D advance clearances, the Patent Box, and advance pricing agreements.
Attracting International Investment
Importantly, companies without a UK presence but intending to invest here could also apply. This signals to overseas investors that the UK is serious about providing a stable tax environment for tech.
What Tech Companies Should Do Now
Although the consultation closed on 17 June 2025, tech businesses should:
- Review pipeline projects to identify where tax certainty could de-risk investment.
- Assess intangible asset strategies, particularly around IP valuation and cross-border transactions.
- Monitor HMRC’s response and prepare to engage with the final framework once published.
Conclusion
The Advance Tax Certainty for Tech initiative has the potential to deliver a significant boost to the UK’s technology sector by reducing uncertainty, attracting inward investment, and supporting innovation.
To succeed, it must balance the needs of large corporates with fair access for startups and SMEs, while providing much-needed clarity on intangible assets. If implemented effectively, this could become one of the most important developments in UK tax policy for technology in the coming decade.
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