UK Tech Entrepreneurs Sound Alarm on Capital Gains Tax Hike
A proposed increase in capital gains tax on share sales has sent shockwaves through the UK’s tech industry, with entrepreneurs and investors warning that it could lead to an exodus of talent from the country.
Government Plans to Raise Capital Gains Tax
Reports suggest that Finance Minister Rachel Reeves is planning to hike capital gains tax (CGT) to as high as 39%, with the aim of closing a multi-billion funding gap in public finances. The move has been met with fierce opposition from the tech industry, with many arguing that it would stifle entrepreneurship and innovation.
Industry Leaders Speak Out
In an open letter to Reeves, over 500 entrepreneurs urged her to resist calls to hike CGT or restrict the business asset disposal relief scheme. They argued that the plans would make the UK less competitive and jeopardize the success of its startup ecosystem.
Concerns Over Brain Drain
Adam French, partner at seed investors Antler, told us that the proposals have caused a “rising sense of stress” in the UK tech ecosystem. “If implemented, such a move would send a deeply negative signal,” he said. Harry Stebbings, a venture capitalist, warned that entrepreneurs would leave the UK “en masse” if the government raises capital gains tax.
Not Everyone Agrees
However, a report by the Institute for Public Policy Research found that some millionaire business owners would welcome an increase in CGT to match the higher rate of income tax. They argued that CGT is not a primary driver of investment decisions, and that entrepreneurs are more focused on issues like access to financing and market opportunities.
The Future of UK Tech
As the government prepares to announce its budget, the fate of the UK’s tech industry hangs in the balance. Will the proposed increase in capital gains tax stifle entrepreneurship and innovation, or will it help to raise much-needed revenue for public finances? Only time will tell.
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