Sir Keir Starmer last week attempted to dismiss fears that entrepreneurs could quit the UK, arguing there was “no reason” for them to do so.
As well as a possible increase in capital gains, there are also fears that tax breaks, such as Business Asset Disposal Relief, could be removed as Ms Reeves claims to plug what she claims is a £22bn black hole in the economy.
Early-stage businesses will also face increased costs if the Chancellor chooses to raise National Insurance contributions from employers.
Dom Hallas, executive director of Startup Coalition, said founders were not “naive” about the need to sort out the country’s finances. However, he stressed that “there is a limit and it’s important the Government knows where it is”.
He said most young founders are highly mobile and can shift their companies abroad with ease. “As one founder put it to me, their business is 30 people with laptops, there is no hard tie [to the UK],” he said.
As well as the draw of Silicon Valley, founders are being lured by other European start-up hubs, such as Paris and Berlin. Mr Hallas said there is also an “incredible push from the Middle East with Dubai and the UAE”.
Portugal, meanwhile, has proposed offering tax breaks for under-35s in a bid to attract talented younger workers to the country.
Henry Whorwood, director of research at the consultancy Beauhurst, said the survey’s findings should be a “massive wake-up call for a Government that desperately needs economic growth”.
One vocal critic of the Government’s proposed tax raid is Sara Murray, chief executive of Big Technologies, which makes electronic monitoring tags. She said that entrepreneurs were under “attack” by the Treasury.
“Everybody I know is looking at moving overseas and for the first time I’m considering it,” she said. Big, which is valued at £400m, went public on London’s AIM stock exchange in 2021.
However, the Chancellor is now said to be considering scrapping an inheritance tax break on AIM shares, causing uncertainty for hundreds of listed businesses.
