What's new for IT in Osborne's budget

Tax relief for computer games industry has been axed

There was little mention of IT in Osborne's budget, which he described emphatically as progressive; and perhaps it was if you ignore the 2.5 per cent increase in VAT.

But what impact will the announcements he made have on the IT industry?

Perhaps the most important points were those relating to the National Air Traffic Control System (NATS), the computer games industry, and the reduced tax on entrepreneurs.

The government announced that it is considering selling its 49 per cent stake in NATS, which was criticised in the press for delayed implementation when it was built.

The abolition of tax relief for the computer games industry as announced by Alistair Darling in April, and described by Chancellor Osborne as "badly targeted", will take effect in April 2012.

The £1bn industry had lobbied hard for the relief, arguing that it would enable it to compete with countries such as Canada, France and South Korea, which also introduced more attractive fiscal regimes. The UK had been slipping down the league tables as talent was lured abroad. This will be seen as a regressive move by the industry.

Entrepreneurs, of which there are many in IT, who had originally paid tax on their first £2m of earnings, will see their tax-free income increased to £5m.

But as important as this were the omissions, with no mention of green IT, STEM education, the National Programme for IT, and just a cursory mention of extending broadband to rural areas.

The 50p landline tax as announced by the last government and dropped before the end of the last parliament, was weirdly reabolished by the chancellor, according to Osborne himself, who went on to reiterate his commitment to relying on market forces for the delivery of this service. However, he said that this would be supplemented by surplus money from the digital switchover programme as first proposed in the conservative manifesto.

Other areas to watch out for include an increase in efficiency savings expected from government departments to 25 per cent from 20 per cent. Although specific details are yet to be announced some of this will undoubtedly come from greater reliance on efficient IT such as shared services and the G Cloud.