Nick B.’s Post

Is the door still open in the UK for investment in private companies? Prior to the UK Budget some investors had been holding off to see what the Chancellor would do with regard to Capital Gains Tax, and Carried Interest. Whilst not great the budget is not as bad as had been feared. These are the main impacts: 1) Capital Gains Tax will rise from 20% to 24% for higher rate tax payers. 2) Carried interest sees a 4% increase to 32% from April 2025, and starting in April 2026 will fall under the income tax regime, (subject to National Insurance Contributions) with an effective tax rate of 32.625%. 3) Entrepreneurs relief (now Business Asset Deposal Relief BADR) used to allow a 10% CGT rate up to £1m and this will rise to 14% April 2025, and 18% by April 2026. The changes are unwelcome because anything that stifles entrepreneurship cannot be seen as good nor promoting growth, despite Labour's assurances that they are pro-growth government. This may well translate to meaning investment in state controlled or near state controlled enterprises, which have a poor track record. This all being said the Private Equity, VC, Angel, Seed investing space remains intact. The time frame for returns in the asset class are relatively long relative to more liquid investments and most investors are prepared to ride the tide. What it means for our clients seeking to raise funding is that everything has to be more perfect, more thoroughly thought through to attract the right investors. The right companies always find funding, our aim at DFC is to select those companies that will fit the bill from start to finish. For more information contact [email protected]

The Autumn Budget 2024: Is the UK Government Making Property Investment Unviable? As a UK property entrepreneur, today’s budget has left me frustrated. The rise in taxes could destabilize investor confidence and limit growth across our industry. Here’s why I see this as a setback: 📉 Capital Gains Tax: Raising CGT from 10% to 18% is an 80% increase for basic-rate taxpayers, and the jump from 20% to 24% is a 20% hike for higher brackets. 💸 National Insurance: A “small” 1.2% increase from 13.8% to 15% translates into a 9% rise in total costs for employers—far more than it appears. 💼 Stamp Duty: With a new 5% surcharge on buy-to-let properties, plus a potential additional 2% for non-residents, this budget could deter local and international investors who bring diversity and capital to our market. While I still believe in the resilience of the UK housing market as a safe and reliable mid to long term investment. I can’t ignore the challenges that the Labour government policies impose on our industry. Are these measures supporting entrepreneurship and growth, or creating barriers for us? #AutumnBudget2024 #PropertyInvestment #UKRealEstate #Entrepreneurship #TaxPolicy #InvestSmart

Raising CGT rates would not deter investment, says IPRR Increases to Capital Gains Tax (CGT) at the upcoming Budget would not deter investment into the country, according to the Institute for Public Policy Research (IPPR). The think tank says that low CGT is not an effective way at encouraging entrepreneurship and investment. Equalising CGT to income tax could help the Chancellor’s efforts to close the £22 billion hole in the public finances, with the IPPR saying doing so could raise up to £14 billion. The IPPR said investors and entrepreneurs do not consider CGT when they set up a company as CGT only becomes relevant at the point of selling a business or assets. The think tank claims low CGT rates are poor value for money, as they equally reward passive asset ownership and active entrepreneurship. Finally, it says that unequal tax on income and capital gains encourages employees to act as ‘businesses’, creating labour market distortions. The IPRR said: ‘Entrepreneurship and investment are vital to generating sustainable growth for the UK, but low capital gains tax is not an effective way at encouraging these activities. Instead, government and business must work together to make the most of the targeted support that is already on offer. ‘Closing the tax advantage on capital gains means that the system becomes more efficient whilst raising revenues to adequately fund the public services and investment that business across the country rely on.’

It’s fantastic to see #SEIS and #EIS highlighted in The Times this weekend! The article delves into the potential rise in Capital Gains Tax (CGT) in the upcoming budget and explains how these tax-efficient schemes can be highly beneficial for investors. It was insightful to hear perspectives from Nicholas Hyett at Wealth Club and Jason Hollands at Evelyn Partners. We’re also proud to have our SEIS fund listed on Wealth Club, supporting investment into high-growth British businesses. A key takeaway: SEIS & EIS are vital to "encourage more investment into British businesses and drive growth in the UK economy." #Investment #TaxEfficient #UKBusiness #Economy #VentureCapital https://lnkd.in/eKKaGQTa Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. 

Autumn Budget changes could be devastating for the small business community across the UK. 99% of the UK Economy are small businesses that need financial initiatives to support long-term growth. The post-Pandemic aftermath of lending recovery combined with economic crises have had a significant de-stabilising effect across all businesses; whereby small businesses are the most vulnerable. The growth and maturation of the UK economy in the new age of AI and sustainability development will be led by the small business contribution because of their agility and innovation. Financial policies need to be designed to help small business economy thrive in scaling up. Changes to the Capital Gains Tax and Business Asset Disposal Relief (BADR) need to protect small businesses not create significant barriers that carry a potential insolvency risk. Shalini Khemka CBE, Founder and CEO of E2E has raised these issues in an Open Letter to the Chancellor (see below). Please let us stand together to protect small businesses and share our voice by signing the letter here: https://lnkd.in/dDUnaBEm #protectentrepreneurs #smallbusinessowners #GoodBizSolutions #AutumnBudget2024

The Chancellor is considering significant changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) in the upcoming Autumn Budget on October 30th, 2024. These proposed changes could see CGT rates rising as high as 45%, aligning with income tax rates—this poses a serious threat to the entrepreneurial spirit that fuels the UK economy. BADR was created to recognise the personal and financial risks entrepreneurs take when building businesses. Restricting this relief and increasing CGT rates would discourage new ventures, stifle innovation, and hinder the ability of startups to scale by offering stock options or equity. We must act now to protect the future of UK entrepreneurship. ✊ We’ve successfully rallied support before, and now we need your voice again. Add your name to our initiative and stand with fellow business leaders to ensure our message is heard loud and clear. Sign here: https://lnkd.in/eQzNpBcW Together, we can safeguard the future of extraordinary entrepreneurship in the UK. 💼 #SaveBADR #ProtectEntrepreneurs #E2Exchange #UKBusiness #SaveCGT #CGT #BADR #AutumBudget2024 #Budget2024

Before the release of the Autumn Budget earlier today, there had been a lot of speculation about an increase in Capital Gains Tax. With some less optimistic predictions suggesting a raise to 40%.  However, we are delighted to see that the Government understands the important role that business owners play in the UK economy. This has been seen by a slight rise in CGT from 20% to 24%, and the basic rate from 10% to 14%.  Speaking in the House of Commons Rachel Reeves, the Chancellor of the Exchequer, said: “We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances.”  Reeves was quick to add that despite the raise: “The UK will still have the lowest Capital Gains Tax rate of any European G7 economy.” In addition to this Business Asset Disposal Relief will remain at 10% until April 2025, it will then increase to 14% and 18% in 2026-27. The lifetime allowance will remain at £1million and this relief will only be available to business owners who have owned the company for two years. This is to reward entrepreneurs who have invested in their business.  #AutumnBudget #CapitalGainsTax #CGT #Budget2024 #UKGovernment #Labour #BusinessSales

Can you believe it? The UK is planning to double the capital gains tax from 20% to 39%! This move could have a huge impact on entrepreneurial spirit in the UK. It might discourage individuals from starting businesses, which could lead to long-term consequences for the economy. Entrepreneurs are the driving force behind innovation and economic growth. They make enormous personal sacrifices, work tirelessly, often sacrificing their weekends, endure years of low income, create jobs, and contribute significantly to taxes. They don't do this solely for financial gain, but to drive innovation, build technology, and create products that benefit society as a whole. Taxing the risk-taking nature of entrepreneurship at the same rate as regular income is not just unjust, but it's also detrimental. This policy will ultimately make the UK less attractive to ambitious and driven individuals, discouraging them from investing their skills and resources in the country's growth. Moreover, it's concerning to note that a significant portion of the UK's infrastructure is now in the hands of foreign investors, limiting the country's control over living costs. Doubling capital gains tax won't address these systemic issues; instead, it will only drive entrepreneurs to seek more business-friendly environments, taking their jobs, innovation, and investments with them. If the government fails to appreciate and reward the risks entrepreneurs take, it's inevitable that individuals will seek opportunities elsewhere. It's crucial for policymakers to consider the long-term consequences of this tax proposal and its potential impact on the UK's entrepreneurial landscape. #economy #entrepreneur

Chief Investment Officer Ben Conway and Senior Research Analyst George Salmon, CFA offer their insights on the latest UK Budget, focusing on its potential long-term impact on investment strategy. Notable measures include capital gains tax rising to 18/24%, reduced Inheritance Tax relief on AIM shares, and an increase in the 'carried interest' tax to 32%. They discuss the implications for AIM markets, government bond yields, and UK corporates. Read the full article here: https://lnkd.in/eUrXC9WE

Its my first Budget from outside HM Treasury and im struck by a few things for the startup ecosystem. I wont go over the list of relevant measures which are well documented by now (and you can find Startup Coalition immediate reaction in our newsletter - see comments), but a few additional thoughts: 📃 The Budget speech is written to the letter - therefore we should not dismiss Rachel Reeves words in her speech promising to “continue to work with leading entrepreneurs and venture capital firms to ensure our policies support a positive environment for entrepreneurship in the UK”. Now it's essential we hold the Chancellor to this promise. 📉 Alongside the policy announcements, the underlying economic forecast remains drab. Economic growth remains below 2% towards the end of the forecast and the overall headroom in the final year is v tight at £9.9 billion (0.3 per cent of GDP). This means just a small change in spending pressures could open the door for more tax rises. Given how forcefully the government has defended its "working people" manifesto commitment, this could back them into a corner on business tax rises later in the parliament, esp. if their measures do not change the UK's growth trajectory. 👏 The Chancellor will be happy with the landing of CGT and BADR, whether the expectation management was on purpose or by accident (I suspect the former). Setting hares running early, before landing in a less worse position, is a classic strategy. But whilst the politics has softened the blow, the sector wont take this as a win and the need to look at how we can encourage entrepreneurship remains more important than ever. Looking ahead to winter and spring, I'll be engaging closely on investment-related taxation (e.g. carry, R&D, EMI etc), regional economic renewal, industrial strategy, capital markets and of course the multi-year spending review. Let's chat if you are interested in any of these areas! Picture from HM Treasury.