Sigh of relief for UK tech founders as Labour hikes capital gains tax by less than feared
On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”. (Photo by Oli Scarff/Getty Images)
Oli Scarff | Getty Images
LONDON — Britain’s Labour government on Wednesday announced plans to raise the rate of capital gains tax on share sales, news that offered some relief for technology entrepreneurs who feared a more intense tax raid on the wealthy.
Finance Minister Rachel Reeves on Wednesday hiked capital gains tax (CGT) — a levy on the profit investors make from the sale of an investment — as part of her far-reaching budget announcement. The lower capital gains tax rate will be increased to 18% from 10%, while the higher rate will climb to 24% from 20%, Reeves said. The tax hikes are expected to bring in £2.5 billion.
“We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances,” Reeves said, adding that, even with the higher rate, the U.K. would “still have the lowest capital-gains tax rate of any European G7 economy.”
Reeves maintained the £1 million lifetime limit on capital gains from the sale of all or part of a company under business asset disposal relief (BADR), quashing fears from entrepreneurs that the tax relief scheme for entrepreneurs would be scrapped.
However, she added that the rate of CGT applied to entrepreneurs selling all or part of their business under BADR will be increased to 14% in 2025 and 18% a year later. She stressed that this still represented a “significant gap compared to the higher rate of capital gains tax.”
In a less welcome move for businesses, Reeves also announced plans to increase the rate of National Insurance (NI) — a tax on earnings — for employers. The current rate is 13.8% on a worker’s earnings above £9,100 per year. This is set to rise to 15% on salaries above £5,000 a year.
The changes form only a small part of sweeping fiscal changes the recently-elected Labour government laid out in its debut budget Wednesday in an attempt to close a multibillion-pound funding gap in public finances.
‘Brain drain’ feared
Reeves’ announcement comes after speculation over capital gains tax changes caused a backlash from tech founders and investors. Even prior to Reeves’ announcement, the anticipation that CGT would increase had caused angst for tech founders across the country.
On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”
A survey of 713 founders and investors conducted by Startup Coalition with private company database Beauhurst, showed that 89% of those polled would consider moving themselves or their business abroad, with 72% having already explored this possibility.
The survey data also showed that 94% of founders would consider starting a future company outside of the U.K. if the government were to raise the CGT rate.
Dom Hallas, executive director of Startup Coalition, said that while the survey findings were grim, he doesn’t expect founders will “flee if things get hard” as they “aren’t naive about the role of taxes in society.”
Following Reeves’ budget speech, Hallas told CNBC via text message that, “Any budget with increases to CGT and NI, gradual increases to BADR and taxes on investors going up, is never easy and today will be hard for founders seeing taxes on their businesses rise.”
However, he added: “We appreciate that the Government has listened to ensure that entrepreneurs’ biggest fears have not materialised and some balance has been struck including maintaining all important R&D [research and development] investment.”
Barney Hussey-Yeo, CEO and co-founder of financial technology app Cleo, told CNBC last week he was considering a move to the U.S. as a result of Labour’s tax plans.
“There’s so many founders already leaving, or already considering leaving — and they’re excited to go to Silicon Valley,” Hussey-Yeo told CNBC on the sidelines of venture capital firm Accel’s EMEA Fintech Summit in London last week.
Hussey-Yeo didn’t respond to a request for comment Wednesday on whether he still plans to move abroad. However, he told CNBC that the budget announcement was “better than I thought it would be,” adding it “seems like they listened” to entrepreneurs.
Paul Taylor, CEO of London-headquartered fintech firm Thought Machine, said that though it was reassuring to see the government listening to founder concerns, increases to NI contributions would prove costly. Thought Machine’s U.K. payroll spend is expected to spike by £800,000 as a result.
“This is a significant amount for companies like us, which rely on investor capital and already face cost pressures and targets,” Taylor told CNBC Wednesday. “Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability.”
Focus on growth-oriented policy
Tech entrepreneurs and investors are urging the government to return to its focus on fostering growth and innovation in the U.K., messages which were key to Labour’s election manifesto prior to the landslide win that saw Keir Starmer become prime minister.
“We’re already seeing early-stage firms in the UK struggle securing pre-seed and seed funding, with VCs here having a lower risk appetite. A higher CGT will act as a further deterrent,” Phil Kwok, co-founder of EasyA, an e-learning startup, told CNBC via email.
“With all the factors at play, we could see investors and the next generation of founders looking to another markets like the U.S.,” he added.
Hannah Seal, a partner at Index Ventures, told CNBC that the government should “pursue reforms that make it easier for startups to attract talent through employee ownership and ensure all regulators prioritise innovation and growth.”
“Startup-friendly policies like these will be essential to signal the U.K.’s commitment to remaining a globally competitive hub for innovation, especially in light of today’s announcements,” she added.
Edgar Randall, managing director of U.K. and Ireland at data and analytics firm Dun & Bradstreet, told CNBC that in order to remain competitive, the government should “weigh the cumulative effect of policies impacting growth.”
These include policies impacting energy costs, employer National Insurance contributions, and tax structures on capital gains and dividends.
Ultimately, “business decisions are influenced on more than just fiscal policy,” Randall said, adding that. ‘entrepreneurs look at the ecosystems [as] a whole.”
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Peter Thiel just bought a big stake in Tom Lee’s ether company and the shares are surging
Peter Thiel, president and founder of Clarium Capital Management LLC, holds hundred dollars bills as he speaks during the Bitcoin 2022 conference in Miami, Florida, U.S., on Thursday, April 7, 2022.
Eva Marie Uzcategui | Bloomberg | Getty Images
Bitmine (BMNR) 1-month
The current wave of interest in Ethereum and related assets follows an announcement by Robinhood that it will enable trading of tokenized U.S. stocks and ETFs across Europe, and a groundswell of interest in stablecoins throughout June following Circle’s wildly successful IPO and ongoing progress in Congress on the Senate’s proposed stablecoin bill, the GENIUS Act.
The price of ether itself also continued its rally, up more than 4% Wednesday. The coin has doubled in price in the past three months.
Thiel is a venture capitalist and hedge fund manager best known as a cofounder of both PayPal and Palantir and an early investor in Facebook. Founders Fund was an investor in Tagomi, the crypto brokerage acquired by Coinbase in 2020, and Polymarket, the prediction market built on Ethereum.
NVIDIA founder and CEO Jensen Huang speaks during the NVIDIA GTC Paris keynote, part of the 9th edition of the VivaTech technology startup and innovation fair, held at the Dôme de Paris in the Porte de Versailles exhibition center in Paris on June 11, 2025.
Mustafa Yalcin | Anadolu | Getty Images
Nvidia CEO Jensen Huang sold another 225,000 shares of the chipmaker, totaling about $37 million, according to a U.S. Securities and Exchange Commission filing.
The sale comes as part of a plan adopted in March for Huang to sell up to 6 million shares of the leading artificial intelligence company. Huang began trading stock last month. His most recent sale, disclosed last Friday, totaled 225,000 shares, or about $36 million.
Since he began selling stock this year, Huang has unloaded 1.2 million shares, totaling about $190 million, according to InsiderScore. In last year’s prearranged plan, Huang cashed in over $700 million.
AI demand and the need for graphics processing units powering large language models have spiked Huang’s net worth and propelled Nvidia past a $4 trillion market capitalization, making it the most valuable company.
That surge in value has put Huang above Berkshire Hathaway’s Warren Buffett in net worth on Bloomberg’s Billionaire Index.
In another significant win, Nvidia said this week that it plans to soon restart sales of its H20 chips to China after the Trump administration indicated that it would approve export licenses.
Earlier this year, the administration said Nvidia would need a license approval to ship the chips, designed specifically for China.
“The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon,” the company said in a statement Tuesday.
Huang said during a press conference on Wednesday in Beijing, China, that he wants to sell chips more advanced than the H20 to China at some point.
Huang wasn’t the only stakeholder to unload Nvidia shares. Board member Brooke Seawell sold $16 million worth of stock.
WATCH: H20 news should add 10% to Nvidia’s street estimates, says Deepwater’s Gene Munster
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Nvidia CEO Jensen Huang wants to sell more advanced chips to China after H20 ban is lifted
Jensen Huang, chief executive officer of Nvidia Corp., speaks to members of the media in Beijing, China, on Wednesday, July 16, 2025.
Na Bian | Bloomberg | Getty Images
Nvidia is looking to ship more advanced chips to China than its current generation, CEO Jensen Huang said on Wednesday, as he looks to revitalize sales in the world’s second-largest economy.
The comments come after Nvidia said on Monday that it will resume sales of its H20 artificial intelligence chip to China, reversing a previous ban. The H20 is a less-advanced semiconductor designed for AI workloads that comply with U.S. export restrictions to China.
“I hope to get more advanced chips into China than the H20,” Huang said during a press conference in Beijing, China, in response to a CNBC question.
“And the reason for that is because technology is always moving on … today Hopper’s terrific but some years from now we will have more and more and better and better technology, and I think it’s sensible that whatever we’re allowed to sell in China will continue to get better and better over time as well,” he said referencing Hopper, Nvidia’s chip architecture that the H20 is built on.
Nvidia has been caught in the crosshairs of U.S.-China tensions over trade and technology. The tech giant has faced several rounds of restrictions that have forced it to restrict access of its most advanced chips to China. In response, Nvidia has developed semiconductors that comply with export restrictions, such as the H20.
Nvidia took a $4.5 billion writedown on the unsold H20 inventory in May and said sales in its last financial quarter would have been $2.5 billion higher without any export curbs.
Huang has trod a fine line between praising U.S. President Donald Trump’s policies regarding reshoring chip manufacturing to America while also lobbying for change on curbs to China.
The Nvidia boss has argued the Chinese AI market could be worth $50 billion in the next two-to-three years and that it would be a “tremendous loss” for American firms not to be part of that. Huang also told CNBC this year that Nvidia’s Chinese rival Huawei has “got China covered” if U.S. firms can’t participate in the market.
“Export control are things that are outside of our control and they can be quite disruptive to our business. It is our job only to inform the governments of the nature and the unintended consequences of the policies that they make,” Huang said during his visit to Beijing.
Nvidia has also laid out a roadmap to release more advanced chips, though it remains unclear if the U.S. government would allow Nvidia to sell more advanced products to Chinese companies. However, U.S. Commerce Secretary Howard Lutnick suggested on Tuesday that the government would continue to allow chip sales to China so that companies in the market rely on American technology.
“The idea is the Chinese are more than capable of building their own,” Lutnick told CNBC. “You want to keep one step ahead of what they can build, so they keep buying our chips.”
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