An increase in capital gains taxes (CGT) is anticipated to be announced at this week’s Autumn Statement. This will impact investments in firms and may undermine support of early-stage ventures. This much is clear. Today, we have two more executives adding their voices to the forthcoming Labour government budget.
Tiago Veiga, CEO at Aurum Solutions, worries that higher CGT will drive companies out of the UK, thus undermining the economy that desperately needs smaller firms to drive growth and prosperity. Veiga says that “hiking the rate of capital gains tax is counterintuitive to the UK’s ambition of becoming an established global hub for technological innovation and Fintech.”
“What we need to be doing is creating an environment that enables businesses to generate wealth, and incentivise growth, not the opposite. “[If the expected hike goes ahead] The onus will be on entrepreneurs to drive even greater growth, so they can reap the same rewards. To do so, businesses should focus on proactively finding the tools they need to scale sustainably, and this starts with enlisting time and cost-saving solutions. Technology like automation can free up an enormous amount of resources for businesses to spend on revenue-generating activities, particularly for startups who may already have limited capacity. Against a backdrop of greater tax burdens, this will be key to business prosperity in the long run,” says Veiga.
Taking the opposite side of the discussion, Gilbert Verdian, CEO and Founder of Quant, supports higher taxes.
“The imagined ‘mass entrepreneur exodus’ makes for a good headline, but it is more rhetoric than reality. There are many, many more of us entrepreneurs who are committed to staying put and paying our fair share. Nowhere else can match London when it comes to talent, capital raising, and stable regulation. These advantages have been built up over centuries of competitiveness and innovation and – regardless of tax tweaks – are here to stay,” Verdian claims. “It may be painful in the short-term, but this is the budget we need to have. We need to remember that in the long run, this will increase government investment in large infrastructure projects and public services, boosting the health of the whole economy. Ultimately, the Budget can be seen as a catalyst for future growth.”
We will know more tomorrow when the Chancellor shares the Labour vision for managing the budget and economy.