Founders and investors slam UK “exit tax"

A tax on the assets of wealthy founders who build businesses in the UK then leave the country would tell entrepreneurs that “their ideas and innovations aren’t welcome" in the UK, over 150 founders and investors across the UK ecosystem have warned.

The warning from founders and investors representing more than £10 billion in UK economic value follows rumours that the UK chancellor Rachel Reeves is considering a 20 per cent "exit tax" on the assets of wealthy founders who build businesses in the UK then leave the country for tax reasons.

Those who have signed the letter include the founders of AI talent management platform Beamery and fintech Cleo and funds such as Dawn Capital and Harry Stebbings' 20VC.

The chancellor believes the move will raise around £2bn to help plug a gap of up to £30bn in the public finances.

The letter, written by lobby group the Startup Coalition, says: “We share the Government’s ambition for growth and sound public finances. Progress on these will only be achieved by making the UK the best place to scale the next generation of global companies, not by punishing those who choose to leave. 

“At a time when founders are being courted around the world, we should be building bridges, not walls. We should attract talent and capital, pool investment, and deliver policies that lower barriers and give globally minded founders every reason to build in the UK and scale to the world.”

The letter highlighted the “painful burden” of taxes already shouldered by founders, including a rise in Capital Gains Tax.

It added: "We should be under no illusions that these changes have made global tech founders and investors question the competitiveness of the UK. Instead of rebuilding trust with entrepreneurs, a potential exit tax sends the opposite message: the beatings will continue until morale improves.”

Stebbings told the Times the tax would be the “final nail in the coffin” for founders.

He said: “It shows the complete lack of understanding that we have already lost the most wealthy people, and this will be the final nail in the coffin that will make those few stragglers who remain — including me — leave.”

In October this year, it was revealed that Nik Storonsky, the co-founder and CEO of Revolut, had abandoned the UK for the United Arab Emirates following rule changes around tax breaks.