The UK’s latest Budget has cast uncertainty over its reputation as a hub for entrepreneurship, with business leaders warning of a potential exodus of talent and investment.
Shalini Khemka CBE, CEO of the entrepreneurial community E2E, expressed disappointment in the Budget’s new tax measures, which she believes will deter entrepreneurs and business owners. “Today’s budget shows that the current government is not the government for business,” she said. “The changes announced by Chancellor Rachel Reeves will target the very people who help grow the economy.”
The Budget includes several tax adjustments that impact both small and large businesses, including a rise in Capital Gains Tax, an increase in employers’ National Insurance contributions to 15%, and a cap on Business Property Relief at £1 million with a 50% discount on the remainder. Business Asset Disposal Relief (previously Entrepreneurs’ Relief) and inheritance tax (IHT) on AIM-listed shares will also be subject to new limitations. AIM shares, now subject to a 20% IHT rate, will see a cut from the prior 40% relief, a move Khemka warns could reduce liquidity and investment options for SMEs.
In addition, the abolishment of Non-Dom status, an increase in stamp duty, and the introduction of VAT on private schools add further barriers for international entrepreneurs considering the UK as a base for their ventures. Khemka argues these measures create an environment unfavourable to overseas talent: “This sends a clear message that we are not welcoming to entrepreneurs from overseas who wish to start their businesses in the UK,” she said.
The response from the business community has been swift. According to Khemka, many entrepreneurs in her network now see relocating abroad as an increasingly attractive option. “For many, this budget has solidified any confusion around whether to move abroad, and they will seek to relocate as quickly as possible,” she noted, predicting a potential downturn in growth as the UK becomes less competitive.
With rising taxes and reduced reliefs, the UK’s reputation as a pro-business destination faces significant challenges. Experts warn that without a more supportive approach, the UK may struggle to retain the talent and innovation essential for economic growth.
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