UK faces warnings of tech exodus due to pre-budget tax plan | Wilnesh News

LONDON — British tech giants and investors have warned that entrepreneurs could be forced to leave the country if the government goes ahead with controversial plans to increase capital gains taxes on share sales.

Recent media reports indicate that Finance Minister Rachel Reeves plans to increase capital gains tax (CGT) – which applies to investors’ profits from the sale of their investments – The Guardian Said the tax may rise to 39%. Last week, British Prime Minister Keir Starmer tell bloomberg This kind of speculation is considered “off-topic”.

Reeves is expected to announce sweeping fiscal reforms in his Oct. 30 budget to close a multi-billion-dollar funding gap in the public finances.

The government also plans to increase capital gains tax on shares and other assets by “a few percentage points,” according to The Times, meaning those who sell their shares in a takeover, initial public offering or secondary share sale will be hit with any gains Taxed on value.

Bloomberg found that Levi’s also plans to cut the so-called Business Asset Disposal Relief (BADR), which allows entrepreneurs to pay a 10% tax deduction on profits from selling a company.

CNBC has not been able to independently verify the reports. The Treasury Department did not immediately respond to a request for comment.

Some entrepreneurs and investors have warned that the UK could face an exodus of tech entrepreneurs due to reported tax changes.

In an open letter to Levi’s earlier this month, more than 500 entrepreneurs urged the Treasury secretary to resist calls to increase capital gains taxes or limit relief on corporate asset disposals.

“At a time when relief is more competitive in other countries around the world, higher capital gains taxes or any restrictions on BADR would reduce the value of this relief,” reads the letter published by Entrepreneur Network on October 13. competitiveness.

“This means the UK has the second highest capital gains tax rate in Europe and will significantly reduce the incentive for individuals to start their own businesses, jeopardizing the success of our entrepreneurial ecosystem.”

The list of signers includes Giles Andrew and otherssRishi Khosla, co-founder of digital bank Zopa and CEO of financing platform OakNorth, and Victor Riparbelli, boss of artificial intelligence company Synthesia.

They say the plans will make it harder for entrepreneurs to set up business in the UK or actually force them to leave the country.

“By preventing entrepreneurs from starting and growing their businesses, HM Treasury is likely to end up reducing overall taxation,” the letter said.

Adam French, a partner at seed investor Antler, told CNBC via email: “I have noticed a growing sense of pressure in the UK tech ecosystem for proposals like this. If implemented, such a move would send a very negative signal.”

French added: “There is a real risk of complacency in UK tech as competition for talent intensifies in Paris and Berlin, and talent is lost to the US.”

Venture capitalist Harry Stebbins, best known for his popular tech podcast Twenty Minutes, told The Guardian last week that entrepreneurs would leave the UK if the government raised capital gains taxes.

Calling the government’s capital gains tax plans the “biggest” problem for entrepreneurs, Stebbins said: “I know there will be fewer entrepreneurs here. They will leave en masse.”

Not everyone agrees that capital gains taxes should not be raised to raise public finances.

in a Report A group of millionaire business owners said they would welcome an increase in capital gains tax rates to match higher income tax rates, according to a report released last week by the center-left Institute for Public Policy.

The analysis found that capital gains tax was not the main driver of investment decisions, with entrepreneurs paying more attention to issues such as financing channels, market opportunities and broader economic conditions.