UK Fintechs Reflect on Tax Increases, More, as Revealed in Chancellor’s Autumn Budget

Yesterday, the UK government revealed its new budget and the changes being made to cover a deficit while attempting to fuel economic growth. While the punditry will be digesting the statement from the Chancellor of the Exchequer, Rachel Reeves, for days, CI has received a slew of comments from various Fintechs following the budget reveal. Most comments were concerned about impacts to the startup ecosystem. In general, policy changes will take months to move the dial, so it will be awhile before the net effect of the Labour government’s strategies will have on the UK economy.

Popular UK Fintech Curve shared its opinion as its founder and CEO Shachar Bialick said the government’s ambition to strengthen the UK economy and support the stumbling NHS is encouraging. Still, these policies must be paired with measures that truly support economic growth and aid social mobility, like enabling startups and smaller firms. Describing SMEs as the backbone of innovation, Bialick said:

“Yesterday’s increase in Capital Gains Tax may appear modest, yet it underscores a concerning trend that places a heavier burden on smaller companies in an already volatile and highly competitive talent market. Startups, especially in Fintech, which the UK has a unique advantage in, are in fierce competition with global tech giants for top talent. Each additional tax hike on equity options pushes skilled professionals toward high-salary roles at larger firms, which offer liquid stock options and stability that startups often can’t match. Without targeted tax relief or incentives for hiring and growth, we risk widening the gap between emerging firms and established giants, stifling the innovation the UK needs to retain its global edge.”

Bialick said the budget missed an opportunity to address much-needed regulatory reform in financial services.

“To thrive as a world-leading Fintech and startup hub, the UK must adopt a proactive, tech-positive regulatory approach that actively supports digital innovation and risk-taking rather than merely tolerating it. Our message to the Government is clear: if you seek a tech ecosystem that draws top talent and groundbreaking ideas, it is imperative the conditions are cultivated which allow it to flourish.”

To thrive as a world-leading #Fintech and startup hub, the UK must adopt a proactive, tech-positive regulatory approach that actively supports digital innovation Click to Tweet

Laurent Descout, co-founder and CEO of Neo, concurred with Bialicks’ assessment.

“It’s disappointing to see the Chancellor moving forward with the increase in Capital Gains Tax [CGT], as this risks undercutting vital support for start-ups at a time when they need it most. This, coupled with the national insurance hike, represents a significant blow to businesses. Such moves discourage essential investment in start-ups, threatening their growth trajectory, IPO prospects, and the jobs they create. The UK should be fostering a pro-growth environment, especially given the recent spike in insolvencies and this tax increase feels like a step in the wrong direction for the business community.”

It's disappointing to see the Chancellor moving forward with the increase in Capital Gains Tax, as this risks undercutting vital support for start-ups at a time when they need it most Click to Tweet

Quint Group CEO Greg Cox agreed that the national insurance hike is a challenge:

“Today’s rise in employers’ national insurance is yet another challenge for small businesses that have been battling economic headwinds for the last half-decade. At a time when interest rates are set to fall, releasing some pressure and improving liquidity for businesses and consumers, this additional NI burden is an unwelcome cost that threatens to stifle growth, hiring, and productivity. If the government is serious about fixing the foundations of our economy, it should back businesses, not burden them. For a government that wants to encourage national renewal, today’s announcement will set many small firms back.”

For a government that wants to encourage national renewal, today’s announcement will set many small firms back Click to Tweet

The UK Managing Director of SaaS at Ohpen, a core banking provider, Jerry Mulle, described the Autumn Budget as a missed opportunity to address the challenges and stress of home buyers and mortgage holders.

“Today’s Autumn Budget has been anxiously awaited by homeowners and prospective buyers since Labour took office. Unfortunately, it neglected to include details about the permanent mortgage guarantee scheme, promised in Labour’s manifesto, meaning uncertainty around the mortgage and housing market remains,” said Mulle. “Missing an opportunity to alleviate pressure for home buyers, especially for first time applicants, will add further stress to those who are already facing a challenging mortgage application process. In fact, our latest research into the current state of mortgage applications reveals that 38% of homeowning 24–35-year-olds wished they rented for longer instead of going through the mortgage application process due to how stressful it is.

Mulle said the government has a big role to play in helping homebuyers by clarifying schemes and delivering on the “manifesto promises.”

“… with a fifth of consumers aged 18-54 asking for better online tools to relieve stress during the mortgage application process, mortgage lenders must face the reality of the inefficiency delivered by archaic legacy systems,” he stated. “The industry doesn’t need to wait for the Government to work together to make the mortgage application process more transparent and inclusive from the outset. With a joined-up approach, the industry can speed up the application process by taking complex legacy technology out of the equation and enable better real-time data sharing between all the stakeholders involved in the home-buying journey.”

Charles McManus, Chief Executive of ClearBank and co-chair of the Innovate Finance Unicorn Council, shared his concern about the increase in taxes:

“The combined increase in capital gains tax and National Insurance – as well as the drop in the threshold for National Insurance Contributions for businesses – could have a significant knock-on effect in terms of the number of entrepreneurs establishing businesses in the UK, as well as already exacerbating the challenges we have already seen around UK businesses listing in other markets. We acknowledge the challenging conditions this government is currently operating in. However, starting and scaling a business requires ingenuity, grit and determination – as well as taking a major risk – and we support any government that rewards that risk by creating an environment where entrepreneurs have access to the best investors, advice and scaling opportunities available.”

The Director of the Financial Intelligence Unit at RedCompass Labs, Silvija Krupena, criticizes an entirely different aspect of the Autumn Statement – payments:

“I’m disappointed there was no mention of plans to hold social media and technology firms accountable for the fraud that starts on their platforms. True change requires a united front across social media and technology platforms, banks, regulators, and law enforcement. The Payment Systems Regulator’s recent new rules may protect consumers from financial loss, but they neither stop fraud nor solve the underlying problem. It’s time for the government to step up and realise that the onus should not be solely on banks and payment providers when it comes to stopping fraud.”

Krupena said the battle against fraud must start before it happens while calling out Meta (Facebook/Instagram), where “much of this fraud begins.”

“But what is the government doing to urge these platforms to clamp down on fraud?” she asked.

I’m disappointed there was no mention of plans to hold social media and technology firms accountable for the fraud that starts on their platforms Click to Tweet

Scott Dawson, CEO at DECTA, took a more cautiously optimistic approach, saying the Autumn Budget could have been far worse.

“It was not as bad as expected for small to medium businesses. The focus on growth and investments is promising, though many of the intended changes may still put pressure on both consumers and businesses. The government’s tax hikes were undoubtedly intended to address the nation’s debt and inflationary pressures and, as with any government, the hardest decisions tend to be made in the first budget. That being said, the surge in National Insurance Tax will have the unintended consequence of putting businesses under pressure, causing investors to shy away from the UK. This could undo so much progress the sector has clawed back following a tough five years. A large part of that progress is customer goodwill – companies live or die on whether their customers trust them, and in tough economic conditions those companies are going to be forced to compromise.”

Dawson added that when the “rot economy” reaches the payments sector, companies will need to change their business models to stay afloat. This includes cutting back on services and avoiding new technology.

“What we need to avoid is a world in which merchants can’t trust payments companies and consumers can’t trust the entire payments ecosystem. – which is more likely if a lack of investment makes such technologies complex and opaque.”

surge in National Insurance Tax will have the unintended consequence of putting businesses under pressure, causing investors to shy away from the UK Click to Tweet

The Autumn Budget brings some relief to financially vulnerable households commented John Pears, CEO of Lowell. He said the extra £420 from Universal Credit will add some financial breathing room for households. He highlighted some “small changes” like a 1.7% rise in benefit payments, and a 4.1% pension rise, and the rise in living wage by 6.7%, will should help households.

“Money and personal finance remains a sensitive topic for so many, with our research showing that around 17% of the UK population feels uncomfortable discussing their finances. It’s important for anyone feeling overwhelmed by debt to reach out, as this Budget marks a small but positive movement towards helping individuals and families regain financial control. If your household is struggling with problem debt, it’s essential to seek support—whether through charities like StepChange and MoneyHelper or directly from your creditors.”

 



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