Britain's Tech Exodus: Tax Plans Spark Warnings Ahead of Budget
Monday, Oct 21, 2024 5:51 am ET
2min read The UK's tech sector is grappling with concerns over potential tax hikes, as the new Labour government prepares for the Autumn Budget. Fears of a tech exodus have been amplified by proposed changes to capital gains tax and entrepreneurs' relief, with some tech founders and investors threatening to leave the UK if the plans go ahead.
A survey by Oxford Economics, in collaboration with Foreign Investors for Britain, revealed that 63% of wealthy investors plan to leave the UK within two years if the non-dom tax regime is abolished. Additionally, 67% stated they would not have emigrated to Britain in the first place. The UK's non-dom regime, which permits people living in the UK but domiciled elsewhere to avoid paying tax on income and capital gains earnings overseas for up to 15 years, is a 200-year-old tax rule that has been under scrutiny.
The proposed changes to the non-dom regime could cost taxpayers £1 billion by 2029/30, according to the research. Leslie Macleod-Miller, CEO of Foreign Investors for Britain, warned that the government's plans could put revenues at risk for generations. Other countries, such as Monaco, Italy, Switzerland, Dubai, and the Caribbean island of the Bahamas, are actively promoting their jurisdictions to attract wealthy investors.
The tech sector is particularly concerned about the potential impact of tax hikes on entrepreneurs and investors. Barney Hussey-Yeo, founder of the UK's fastest-growing start-up, Cleo, vowed to quit the UK for America if Rachel Reeves hits entrepreneurs with a tax rise at the forthcoming Budget. He received a US visa and would advise others to leave the UK as well if capital gains tax were raised.
The Government is facing warnings from the technology industry about an entrepreneur exodus if Reeves follows through with plans to increase capital gains tax paid on the sale of shares. Founders are also concerned that the Government will scrap entrepreneurs' relief on company sales, which could further discourage entrepreneurs from starting businesses in the UK.
The tech sector is feeling more confident under the new government, according to recent figures from RSM UK. Four in five (80%) tech businesses feel confident their business will grow now that the election is behind them. However, the technology sector will be keeping a close watch on the Autumn Budget, as almost half (44%) of tech businesses said they want to see changes made to innovation reliefs to help unlock more funding for tech companies. A further 44% said they want to see more initiatives to address the skills gap that continues to hinder the tech workforce.
The potential exodus of tech entrepreneurs and businesses could have significant economic impacts on the UK, including job losses, reduced innovation, and lost investment opportunities. As other countries actively promote their jurisdictions to attract wealthy investors, the UK must address the concerns of the tech sector and provide incentives to retain and attract tech talent.
In conclusion, the UK's tech sector is grappling with concerns over potential tax hikes, as the new Labour government prepares for the Autumn Budget. Fears of a tech exodus have been amplified by proposed changes to capital gains tax and entrepreneurs' relief, with some tech founders and investors threatening to leave the UK if the plans go ahead. The UK must address the concerns of the tech sector and provide incentives to retain and attract tech talent to mitigate the potential economic impacts of a tech exodus.
A survey by Oxford Economics, in collaboration with Foreign Investors for Britain, revealed that 63% of wealthy investors plan to leave the UK within two years if the non-dom tax regime is abolished. Additionally, 67% stated they would not have emigrated to Britain in the first place. The UK's non-dom regime, which permits people living in the UK but domiciled elsewhere to avoid paying tax on income and capital gains earnings overseas for up to 15 years, is a 200-year-old tax rule that has been under scrutiny.
The proposed changes to the non-dom regime could cost taxpayers £1 billion by 2029/30, according to the research. Leslie Macleod-Miller, CEO of Foreign Investors for Britain, warned that the government's plans could put revenues at risk for generations. Other countries, such as Monaco, Italy, Switzerland, Dubai, and the Caribbean island of the Bahamas, are actively promoting their jurisdictions to attract wealthy investors.
The tech sector is particularly concerned about the potential impact of tax hikes on entrepreneurs and investors. Barney Hussey-Yeo, founder of the UK's fastest-growing start-up, Cleo, vowed to quit the UK for America if Rachel Reeves hits entrepreneurs with a tax rise at the forthcoming Budget. He received a US visa and would advise others to leave the UK as well if capital gains tax were raised.
The Government is facing warnings from the technology industry about an entrepreneur exodus if Reeves follows through with plans to increase capital gains tax paid on the sale of shares. Founders are also concerned that the Government will scrap entrepreneurs' relief on company sales, which could further discourage entrepreneurs from starting businesses in the UK.
The tech sector is feeling more confident under the new government, according to recent figures from RSM UK. Four in five (80%) tech businesses feel confident their business will grow now that the election is behind them. However, the technology sector will be keeping a close watch on the Autumn Budget, as almost half (44%) of tech businesses said they want to see changes made to innovation reliefs to help unlock more funding for tech companies. A further 44% said they want to see more initiatives to address the skills gap that continues to hinder the tech workforce.
The potential exodus of tech entrepreneurs and businesses could have significant economic impacts on the UK, including job losses, reduced innovation, and lost investment opportunities. As other countries actively promote their jurisdictions to attract wealthy investors, the UK must address the concerns of the tech sector and provide incentives to retain and attract tech talent.
In conclusion, the UK's tech sector is grappling with concerns over potential tax hikes, as the new Labour government prepares for the Autumn Budget. Fears of a tech exodus have been amplified by proposed changes to capital gains tax and entrepreneurs' relief, with some tech founders and investors threatening to leave the UK if the plans go ahead. The UK must address the concerns of the tech sector and provide incentives to retain and attract tech talent to mitigate the potential economic impacts of a tech exodus.
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