In recent weeks, one topic has been making all the headlines in UK startupland: the Budget — and how it’ll impact the country’s tech sector. TLDR; most tech folk are feeling pretty gloomy.
The government is reportedly considering scrapping Business Asset Disposal Relief (BADR) — which limits tax to 10% on exit takings of up to £1m — and raising capital gains tax (CGT) on the sale of shares, as well as employers national insurance contributions (a payroll tax).
It’s led to a chorus of discontent from hundreds of entrepreneurs, founders scrambling to rush through sales and tax experts fielding “unprecedented” enquiries from startups mulling overseas relocation. You don’t have to look far on social media to find tech folk criticising the government and warning of the impact of tax changes on the future of UK tech.
But some in the sector paint a slightly different picture.
Richard Robinson, founder and CEO of legaltech Robin AI, tells me some of the negative reaction from the startup community to the Budget is overblown.
“There’s definitely some point at which taxes are so high that it will dissuade people from taking a risk — but I think that threshold is quite high,” he says.
“When I started Robin AI, I didn’t think about tax even once. There are a thousand things that could kill a small business and thinking about the tax I would pay on an exit just isn’t where my head was.”
It’s a lack of entrepreneurial culture — not tax — that’s holding back UK tech, said Patrick Ryan, cofounder of micro-investing platform Odin.
“I agree with everyone complaining about the CGT changes — but I also think we need to stop being whiny little bitches and just build elite companies in the UK anyway,” Ryan said in a LinkedIn post. “The main thing that needs to change is our culture & mindset, not our taxation system. We need to think big, and aim higher.”
Monzo founder Tom Blomfield also pointed out on X that a founder in California pays a higher rate of capital gains tax on the sale of business shares than the UK, adding that it “hasn’t stopped people there”.
Despite all that, many in the tech sector tell me they’re bracing themselves — and many say they’re already considering drastic measures should taxes rise.
A recent survey from lobby group Startup Coalition of 524 founders found that 89% would consider moving themselves or their business abroad and 72% have already explored this. 94% said they’d consider starting a future company abroad if CGT on the sale of business shares was raised.
While that’s looking likely right now — by how much remains to be seen. After weeks of rumour and speculation though, in just a few short hours we’ll know for sure.
Readers — I want to hear from you. If you’ve got thoughts to share when UK finance minister Rachel Reeves announces her Budget at 12.30 UK time later today, get in touch and let me know. I’m all ears.
Read the orginal article: https://sifted.eu/articles/do-uk-tech-folk-need-to-stop-being-whiny/
