Founders of some of the UK’s most successful start-ups and investors wrote to Reeves saying the tax would “not only tell founders that their ideas and innovations aren’t welcome, but that they should either get out early or not come at all”.
Currently, emigrants can sell British assets after leaving the country without incurring capital gains tax, which is normally set at 20 per cent. Under Reeves’s proposal, they would be required to pay this charge upon departure, though there would be an option to defer payment for several years.
The so-called settling up charge, intended to align the UK with other G7 nations, is expected to raise approximately £2 billion as the Treasury attempts to address a gap in public finances of up to £30 billion. The Treasury declined to comment.
Harry Stebbings, head of one of Europe’s largest venture capital funds, warned the tax would be “the final nail in the coffin” for UK entrepreneurs and prompt a mass exodus of investors. He reported that around 15 founders of British companies valued at more than £500 million had recently told him they intended to leave the country. Stebbings criticised Reeves for a “lack of interest in growth or understanding of how an economy functions”.
Last month, Revolut co-founder Nik Storonsky, whose fortune is estimated at $14 billion, moved his residency from the UK to the United Arab Emirates.
The letter to Reeves argued that the tax would “amount to taxing the symptom of failure, holding founders for ransom rather than fixing the issues that make them want to stay”. Signatories included Alex Stephany, chief executive of AI company Beam, who expressed disappointment that the government had not made the UK a more attractive place to grow and scale businesses.
The letter added that recent capital gains tax changes had already caused international investors to question the UK’s competitiveness. It urged the government to support entrepreneurship rather than punish those who choose to leave. The signatories included founders of five UK unicorns, start-ups valued at over $1 billion.
Dom Hallas, executive director of the Startup Coalition, which organised the letter, said: “The strength of feeling from founders of the UK’s most innovative businesses is clear, anything that punishes them for success instead of working to keep them growing, hiring and creating value in the UK will only make things worse. Policy should motivate entrepreneurs to stay here, not hold them for ransom.”
