Don’t be fooled – Britain’s entrepreneurs are here to stay

The run-up to this week’s highly-anticipated Budget was filled to the brim with an overwhelming amount of uncertainty. 

Fortunately, some of that fear has now faded, and all the ‘tricks’ (and treats) of Rachel Reeves’ plans for Britain’s businesses have finally been revealed. 

That said, despite all the – albeit expected – tax hikes and inevitable barriers to growth that have resulted in Labour’s attempt to fill the £22bn “black hole” in public finances inherited from the Conservatives, the UK seems to be forgetting one very important thing. 

The vast majority of Britain’s most ambitious and resilient entrepreneurs are here to stay. 

Entrepreneur Greg Cox is one of many who have expressed dissatisfaction with the decisions made by Labour this week, especially with the increase in Capital Gains Tax (CGT) and Employers’ National Insurance Contributions (NICs). 

Cox is the founder of UK firm Quint Group, which operates a global portfolio of five fintech businesses. They are all within the consumer credit and payments markets, including Monevo, Acquired.com, Credito, Infinian and MoneyGuru.

“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,” Cox says. 

“Bluntly, the new Capital Gains Tax structure won’t help to inspire entrepreneurs to take risks and build companies and will make attracting investment more challenging, even while maintaining the business asset disposal relief.” 

But Cox himself is no stranger to challenge. He founded his fintech firm in 2009 following the brink of the financial crisis, with just £25,000 of personal capital, and has bootstrapped it ever since. 

The fintech group has now generated a total of half a billion pounds in revenue, and counting. 

With “yet another challenge” for entrepreneurs on the horizon, however, this entrepreneur seems confident Britain’s track record of resilience could prevail. 

“Some entrepreneurs will think longer and harder about building a company and firms will need to keep finding creative, sustainable ways to grow in yet more adverse economic conditions,” Cox says. 

Many of today’s most successful companies emerged in challenging times. 

He adds: “That being said, many of today’s most successful companies emerged in challenging times. 

“A tough investment landscape can inspire founders to prioritise lean, high-impact strategies and embrace risk with confidence. 

“If anything, times like these bring forward bold ideas that might not emerge otherwise… the opportunities for those ready to innovate and commit to their vision are as promising as ever.”

‘More rhetoric than reality’ 

In recent weeks, a number of entrepreneurs and tech groups have come together to fire warning signs over a hike in CGT, threatening an exodus of talent. 

The government has increased the lower rate of CGT from 10 to 18 per cent, and the higher rate from 20 to 24 per cent. It also hiked employers’ NICs by 1.2 per cent to 15 per cent.

This is significantly lower than the highest rumoured predictions of 39 per cent. 

While this may result in a handful of setbacks, some founders are convinced London won’t be de-crowned as a leader in talent and innovation anytime soon.

“The imagined ‘mass entrepreneur exodus’ makes for a good headline, but it is more rhetoric than reality,” Gilbert Verdian, founder and chief executive of fintech firm Quant, says. 

Verdian adds: “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.” 

With employers’ NICs and minimum age now set to rise, small businesses are going to have to think long and hard about how they’re going to keep up in competition. Especially with the higher salaries of larger corporations. 

The Business Asset Disposal Relief (BADR), formerly known as ‘entrepreneurs’ relief,’ managed to avoid the scrap that many had feared, but it will see some change. 

Its current 10 per cent tax rate will increase to 14 per cent from next April, then to 18 per cent from April 2026 onward. 

“Many fledgling startups give employees stock options or shares as part of their compensation package as they cannot compete with the higher salaries offered by established big corporates,” Philip Salter, founder of The Entrepreneurs Network, says. 

[These] changes will reduce this incentive, making it even harder for startups to attract the talent they need to scale.

“[These] changes will reduce this incentive, making it even harder for startups to attract the talent they need to scale, while denying workers the chance to own a piece of Britain’s growing companies.”

‘The hard work starts now’ for entrepreneurs

A rise in such taxes, like that of CGT, isn’t going to necessarily drive Britain’s entrepreneurs to flee, Salter adds. 

If anything, the “pernicious” impact of such change will further prevent start-ups from forming in the first place. 

“We won’t see an exodus on the scale feared given CGT hasn’t been hiked as many feared,” Salter says. 

“However, a lot more needs to be done over the course of the parliament to ensure that the right incentives are in place to encourage the next generation of entrepreneurs to start, scale, exit – and start again – in the UK.” 

This is a view Emma Jones, founder of small business membership community Enterprise Nation, also seems to share.

“Small businesses are always resilient in the face of adversity, but they will need help to rethink their strategy to cope with the extent of this increased tax burden,” Jones says.

“But the news that we’re finally going to get a Small Business Plan and that there will be continuity on existing business support with extensions for Shared Prosperity Funding and Help to Grow: Management, means there are resources in place to help guide them through.”