The UK tech sector is growing increasingly nervous about the upcoming UK budget bringing a rise in Capital Gains Tax (CGT), say leading audit, tax and business advisory firm, Blick Rothenberg.
Simon Gleeson, a Partner at the firm, said: “It has been a roller-coaster of a week for the UK tech sector. The mixed messaging from Keir Starmer playing down the tax rises Rachel Reeves could enact in the Budget at the inaugural International Investment Summit 2024 in London this week has only created more anxiety.”
He added: “There is increasing fear that changes in CGT in the Budget will stifle any future investors and eco-systems like Fintech that have put the UK on the map at a close second to New York.”
Simon said: “The recent letter signed by 66 fintech founders and chief executives to Rachel Reeves, saying they are considering leaving the UK if CGT rises is testament to this and weakens Labour’s message that they are a party for growth.”
He added: “The fact that some Monzo employees wish to cash in before Chancellor Reeve’s budget for fear of higher CGT tax rates, is also bad optics for the Government. Start-ups and founders are relentless and tenacious in the pursuit of their vision, to now be taxed for that and to get lower pay for higher long-term rewards seems punitive and opportunistic, if not unfair.”
Simon said: “There is also concern how this reflects externally beyond our borders, with the world watching on how supportive the new UK government actually is. The UK talent pool is a clear differentiator and attraction for overseas investors, with the current tax rules regarding stock options being the biggest incentive on the table to attract top talent.”
He added: “However, the Prime Minister promoting at the International Investment Summit that the government has secured £63billion in investment in the UK, creating 38,000 new jobs offers a silver lining to the cloud of uncertainty facing the UK tech sector.”
Simon said: “But the upcoming Budget remains the elephant in the room, and with just under 2 weeks to go, it may be wise to sit back, back up and sit tight.”