Companies backed by BGF, the UK’s most lively personal fairness investor, have issued a stark warning to Chancellor Rachel Reeves, saying they might cut back funding within the UK if capital positive aspects tax (CGT) is elevated within the upcoming price range.
The message emerged from a survey of firms funded by BGF, lots of that are based mostly exterior of London and the southeast.
Within the survey, 88% of chief executives and firm founders mentioned rising CGT would sign a scarcity of help for entrepreneurs, with 74% anticipating it to straight hurt their companies. Greater than three-quarters (78%) indicated {that a} CGT hike would deter them from making additional investments, in the end threatening job creation and financial development.
BGF CEO Andy Gregory emphasised the rising uncertainty confronted by companies, noting that the potential CGT enhance may have critical penalties for small and medium-sized enterprises (SMEs). Whereas the Treasury has not formally focused CGT for an increase, it stays one of many few main tax avenues nonetheless accessible for potential will increase, after Reeves dominated out hikes to earnings tax, Nationwide Insurance coverage, VAT, or Company Tax.
BGF, which was established in 2011 following the monetary disaster, has invested £4 billion into over 600 companies, together with shopper manufacturers like Brompton and Gousto. This yr alone, it has invested £309 million in 33 firms.
Tech start-ups are significantly involved in regards to the potential impression of upper CGT charges on workers with share choices, typically used as a method to complement decrease salaries. Many worry that a rise would negatively have an effect on worker motivation and retention.
The survey additionally revealed criticism of the federal government’s “make work pay” agenda, which seeks to improve employee rights, together with day-one unfair dismissal protections and the correct to disconnect exterior of labor hours. Greater than 71% of respondents mentioned the steadiness between worker and employer rights has shifted too far, doubtlessly harming smaller companies.
A Treasury spokesperson declined to touch upon the survey, stating: “We do not comment on speculation around tax changes outside of fiscal events.”
