UK startups have broadly welcomed measures introduced by the UK chancellor in the Autumn budget, designed to get entrepreneurs to scale their startups in the UK, which has been a long-running concern for the industry.
However, the response from the fintech industry was mixed, with some praising the budget while others bemoaning that more was not offered to support UK fintech as it looks to retain its leadership position.
In a budget, which saw the chancellor raise taxes by £26bn, chancellor Rachel Reeves said: “We are sending a simple message to the world, if you build here, Britain will back you.”
Unveiling measures to support startup businesses in the UK, the chancellor added: “Growth begins with the spark of an entrepreneur. Half of new jobs in Britain are created by scaleup businesses and we want those jobs created here, not somewhere else.
“Our job is to make Britain the best place in the world to startup, to scaleup and to stay.”
Measures announced in the budget designed to support entrepreneurs scaling up businesses in the UK include broadening the eligibility requirements for the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes.
UK businesses will also get a three-year exemption from stamp duty tax if they choose to IPO in Britain, while the chancellor also launched a “call for evidence” on how the tax system can better back entrepreneurs, with founders and investors at the heart of the review.
An uplift in the Enterprise Management Incentive (EMI) limits, which enables employees to share in the equity value they create, was also announced.
Industry reaction
Dom Hallas, executive director, Startup Coalition, said: “In a tricky budget the chancellor made one thing clear - entrepreneurs and founders building high-growth businesses are the engine of growth in the UK. Is this everything that founders could ever need?
"No. But does this Budget show that the Government has seriously listened to founders and tried to make things better to build and scale a startup in the UK? Emphatically yes.
"Big progress on expanding share options, doubling the scale of EIS and VCTs to back scaleups, and looking again at how entrepreneurs are incentivised in our tax system will make a material difference to founders building today and in the future.”
Alessandro Maiano, co-founder and CEO, Wilbe, said: “This budget makes clear just how much responsibility taxpayers continue to carry in funding the riskiest stages of scientific discovery.
“If the UK wants to become a true science superpower, public investment must be complemented by far greater incentives for private individuals, philanthropists and foundations to support early scientific discovery. Without that shift, taxpayers will continue to take the risk without ever sharing in the reward.”
Cat Mora, director of research operations, Phasecraft, said: “We welcome the UK Government’s commitment to targeted investment in innovation and the message that if you build here, Britain will back you.
"Widening eligibility for enterprise incentives and expanding EIS schemes will go some way towards helping this. To stay ahead, the UK must back the quantum companies bringing real use cases to today’s limited hardware, not just preparing for the machines of the future."
Sasha Haco, co-founder and CEO, Unitary, said: “If we want AI to genuinely raise productivity, the government must go beyond investment and needs to become an enthusiastic customer for startups.
“As well as capital, founders need customers willing to adopt, test and scale innovative products. By using its own buying power, alongside targeted R&D programmes, the government can set the pace for the wider economy. That’s the clearest way to ensure the UK remains a global home for ambitious, high-growth companies.”
Leo Labeis, founder and CEO, REGnosys, said: “Greater clarity on capital gains treatment, entrepreneur relief, and modernised EIS/EMI rules is exactly what founders have been calling for. This is a strong signal that the Government recognises how vital fiscal stability is for scaling high-growth sectors like RegTech.
“This makes the UK an even more attractive place to build and scale financial innovation and reinforces London’s position as the natural home for RegTech globally."
Mike Walters, CEO, Form3, said: "The proposed support for expanding EMI and ensuring that the tax system champions the successes of UK business, founders, and employees is hugely promising.
"Preserving the UK’s status as a global hub for fintech will depend on the government protecting and retaining the deep pools of talent that this industry relies on.“It’s disappointing that there was no mention of any plans to back the progress made by the National Payments Vision.
"The UK is currently a global payments leader, and building out resilience in banking and payments will set the stage for the next decade of growth.
“The government needs to build on its Mansion House pledges and ensure a steady stream of capital continues to flow into high-potential companies where it can directly translate into jobs and economic growth."
Janine Hirt, CEO of Innovate Finance, the industry body for UK FinTech, said: "Today’s budget was always going to be a difficult balancing act to manage public finances while driving growth.
"The UK fintech community was pleased to see the chancellor acknowledge very early on in her budget speech the importance of supporting entrepreneurs and founders, recognising they are key drivers of growth across our country.
"We welcome her announcement of a call for evidence which will seek views on the effectiveness of existing tax incentives, and the wider tax system, for business founders and scaling firms, and how the UK can better support these companies to start, grow and stay in the UK.
"This will go a long way in ensuring the UK cements its place as the best place in the world to build and scale a fintech business."
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