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Calls Grow for Reeves to Walk Away from Capital Gains Tax Raid on Entrepreneurs
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Calls Grow for Reeves to Walk Away from Capital Gains Tax Raid on Entrepreneurs

Monday, October 28, 2024 6:00 am
| Updated:

Sunday, October 27, 2024 17:15

Chancellor Rachel Reeves

More than a thousand business owners signed an open letter to Chancellor Rachel Reeves warning of the punitive effect of a possible capital gains tax increase in the Budget on October 30.

Almost 1,200 business owners have warned of the risks that could arise following the rumored increase in Capital Gains Tax (CGT) and the restriction of Business Asset Disposal Relief (BADR).

These risks – described in a open letter Rachel Reeves from The Entrepreneurs Grid – include a lack of incentives and encouragement for founders to start and build businesses in the UK, which they say will jeopardize growth in the startup ecosystem.

Signatories include Pip & Nut founder Pip Murray, Allica Bank CEO Richard Davies, Zopa co-founder Rishi Khosla, Oaknorth Bank co-founder Oana Jinga and Yonder co-founder Tim Chong.

The calls follow recent reports that Rachel Reeves may be plotting to increase taxes on entrepreneurs selling their businesses as part of her strategy to cover a £40bn tax budget. “black hole.”

The tax relief currently allows business owners to pay a reduced capital gains tax of 10 per cent on sales profits, compared to the standard rate of 20 per cent for higher rate taxpayers.

“Many startups offer their employees stock or stock options as part of their compensation package, as they cannot compete with the higher salaries of large, established corporations,” the letter said.

“Further restrictions on BADR would reduce this incentive, making it even harder for startups to attract the talent they need to scale, while denying workers the opportunity to own a share of Britain’s growing companies.” .

A separate letter signed by 66 founders and chief executives, had said that while group members “do not want to move, founders are increasingly considering leaving the UK” if there is an increase in CGT.

Philip Salter, founder of The Entrepreneurs Network, said removing incentives is “discouraging” current and future founders from starting and building businesses in the UK.

“One thing that has to be said is that business owners don’t normally go out and speak publicly and put their name on a petition like this, which shows how serious it is for them,” he said. City AM.

Responding to last week’s letter, a Treasury spokesman said: “We are supporting businesses through promises to make the business rates system fairer, to cap corporation tax at 25 per cent and to publish a business tax roadmap so that future investments can be planned.” with confidence.”