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.”
Technology
Vibe coding startup Lovable’s latest funding round values it at $6.6 billion, sources say
Lovable cofounders Anton Osika and Fabian Hedin. Credit: Lovable
Vibe coding startup Lovable’s latest funding round values the firm at $6.6 billion and includes U.S. VC firm Accel, sources with knowledge of the deal told CNBC.
That figure is more than triple the $1.8 billion valuation the Swedish AI company achieved after closing its most recent funding round in July. It’s Lovable’s third in 2025 and follows a breakneck year of growth that’s seen it become one of Europe’s most valuable startups.
Both sources asked to remain anonymous while discussing private information. Forbes previously reported in November that the round would value the company at “around” $6 billion.
Accel was participating in the round, both sources said, which has not been previously reported. Accel participated in Lovable’s previous round and has emerged as a key backer in the wave of new AI startups. It’s participated in billion-dollar rounds for vibe coding startup Cursor and former OpenAI executive Mira Murati’s AI company Thinking Machines.
U.S. investor Khosla Ventures is also participating in the latest round, one of the sources told CNBC.
Lovable, Accel and Khosla Ventures have been approached for comment by CNBC, but had not responded as this article went live.
Founded in 2023, Lovable reported $200 million in annual recurring revenue (ARR) in November, just under a year after achieving $1 million in ARR for the first time.
The startup’s July fundraise picked up $200 million. As well as Accel, investors then included Creandum, Klarna founder Sebastian Siemiatkowski, ElevenLabs founder Mati Staniszewski and Synthesia founder Victor Riparbelli.
Lovable is Europe’s leading player in the vibe coding space, which has seen huge investor interest in recent times.
In the U.S., Anysphere, which created coding tool Cursor, raised $2.3 billion at a $29.3 billion valuation in November. In September, Replit hit a $3 billion price tag after picking up $250 million and Vercel closed a $300 million round at a $9.3 billion valuation.
Based in Stockholm, the company is opening offices in Boston and San Francisco.
Lovable’s platform uses AI models from providers like OpenAI and Anthropic to help users build apps and websites using text prompts, without the need to understand coding.
The startup said that 100,000 projects were being built using its platform every day when it announced its latest ARR figures in November.
Robotaxis felt like science fiction just a decade ago, but this year, autonomous vehicles became a commonplace option for paying passengers across big cities in the U.S. and parts of Asia.
Alphabet-owned Waymo kept expanding and dominates the robotaxi market in the U.S., though rivals Tesla and Amazon-owned Zoox also launched the first versions of their services in 2025. Meanwhile, Baidu-owned Apollo Go dominated in China.
Some parents are now sending teens to schools and activities in Waymos, and women often praise the privacy of these AVs versus rides with strangers who drive for ride-hailing and traditional taxi services.
Waymo, in particular, has been so successful in its commercial expansion that Tesla CEO Elon Musk acknowledged his rival’s achievements after previously criticizing the Google sister company. At Tesla’s annual meeting on Nov. 6, Musk thanked Waymo for “paving the path here” when it comes to working out the regulatory approvals that allow robotaxi services to do business across much of the U.S.
But driverless transportation has a long way to go before it becomes more mainstream.
A survey by the American Automobile Association in early 2025 showed that 66% of drivers in the U.S. felt fearful and 25% felt uncertain about autonomous vehicles, reflecting the same consumer skepticism that AAA tracked with the survey in 2024.
There have been rampant complaints about noise, congestion and the sometimes erratic driving behavior of robotaxis, along with economic concerns about the impact of AVs on travel and transportation workers. However, known harmful collisions caused by AVs have been relatively few so far, according to the National Highway Traffic Safety Administration, or NHTSA.
Robotaxi fares are currently higher than alternatives today, according to Obi, which tracks ride-hail pricing data and compared Waymo to human-driven Uber and Lyft rides.
Both safety records and costs per ride could change as AV fleets grow from hundreds to thousands of vehicles.
With 2026 just around the corner, here’s how the robotaxi market stands today.
Waymo driverless taxi parks in lower Manhattan in New York City, U.S., Nov. 26, 2025.
Brendan McDermid | Reuters
Alphabet’s Waymo keeps expanding
Furthest along in the robotaxi race is Waymo, which now serves rides to the public in five markets, up from three at the end of 2024. Looking ahead, the company is focused on “scaling up pretty aggressively,” Alphabet CEO Sundar Pichai said.
“Because this involves the physical world, the scale up will take a bit of time, but I think in the ’27-’28 time frame, I think that Waymo will be meaningful in our financials,” Pichai told employees at an all-hands meeting in November, according to audio obtained by CNBC. “I’m pretty excited about what’s ahead there.”
Waymo’s robotaxi service currently operates in the Austin, San Francisco Bay Area, Phoenix, Atlanta and Los Angeles markets. Earlier this month, CNBC reported that Waymo crossed an estimated 450,000 weekly paid rides, and the company in December said it had served 14 million trips in 2025, putting it on pace to end the year at more than 20 million trips total since launching in 2020.
Besides market expansion, Waymo in 2025 also hit key milestones.
In July, the company announced it would be expanding its age range for eligible riders, offering accounts to teens ages 14 to 17, starting in Phoenix. And in November, Waymo began taking customers on freeway routes in the San Francisco, Phoenix and Los Angeles markets, with plans to gradually extend freeway trips to more riders and locations over time.
In recent weeks, the company made a flurry of announcements to further expand its territory in 2026. Waymo is now either operating its robotaxis, planning to launch service or starting to test its vehicles in 26 markets, in the U.S. and abroad.
In 2026, Waymo plans to open service in Dallas, Denver, Detroit, Houston, Las Vegas, Miami, Nashville, Orlando, San Antonio, San Diego and Washington, D.C. The company also announced plans to launch its service in London in 2026, which will mark Waymo’s first overseas service region.
Additionally, the company has begun testing vehicles in New York and Tokyo, two of the most dense cities in which Waymo has started driving. The company hasn’t yet specified service launch timelines for those markets.
Waymo is also eyeing expansion northward. The company has been testing its technology to ensure it can “navigate harsher weather conditions,” Waymo spokesperson Ethan Teicher said. Markets like Denver and Detroit will let Alphabet see how its robotaxis fare against elements like freezing temperatures, blinding snow and icy roads.
And in November, the company hired a new finance chief as it looks toward its next phase, which could include seeking additional outside investment.
Alphabet doesn’t break out Waymo’s financials, but the company’s “Other Bets” segment that includes the robotaxi division reported revenue of $344 million for the third quarter, down from $388 million the year prior. Losses grew from $1.12 billion last year in the third quarter to $1.43 billion in the same period this year.
But as it looks ahead, Waymo faces challenges.
Its rivals are making progress, and the company is beginning to contend with pushback from communities as some say the robotaxis are beginning to drive more aggressively.
In San Francisco, a Waymo hit and killed a locally-known bodega cat in October, and another vehicle hit a small, unleashed dog in November. In Los Angeles, a Waymo drove through an active police standoff earlier this month.
Waymo also issued a software recall for its vehicles after Texas officials said the robotaxis illegally passed school buses at least 19 times since the start of the school year, according to a Reuters report this month.
The company issued the recall as part of its efforts to hold itself to the highest safety standards, Waymo’s safety chief Mauricio Peña said in a statement.
“We will continue analyzing our vehicles’ performance and making necessary fixes as part of our commitment to continuous improvement,” he said.
Additionally, Waymo said that safety guides every development decision it makes, and its vehicles are designed to be safely assertive.
A Zoox robotaxi is seen driving on Nov. 19, 2025 in San Francisco, California.
Justin Sullivan | Getty Images
Amazon’s Zoox gets rolling
Zoox revved up its robotaxi ambitions this year by opening up rides to the public in two markets.
Founded in 2014 and acquired by Amazon for $1.3 billion in 2020, Zoox has set itself apart with its bespoke, toaster-shaped vehicles that have no steering wheel, mirrors or pedals and are equipped with “carriage-style,” inward-facing seats.
The company notched a milestone in September when it began offering public rides around the Las Vegas Strip before launching rides to select users in certain San Francisco neighborhoods in November. Currently, Zoox is dropping riders off at specific destinations in Las Vegas, but in San Francisco, it operates on a “point-to-point” basis more akin to Uber and Lyft.
For now, rides in Zoox’s electric shuttles are free.
That’s because the company still needs federal regulators to give it the green light to operate a paid service. The NHTSA granted Zoox an exemption in August that enables the company to demonstrate its purpose-built robotaxis on public roads, but it must obtain a separate exemption for commercial deployment.
Zoox is planning to begin charging for rides in San Francisco and Las Vegas in 2026, pending regulatory approvals, co-founder Jesse Levinson told Fortune earlier this month.
More markets are also expected in 2026. Zoox plans to gradually expand its service area in San Francisco, and the company operates a fleet of retrofitted Toyota Highlander SUVs in Atlanta, Austin, Los Angeles, Miami, Seattle and Washington, D.C. It’s also preparing to begin testing its boxy robotaxis in Austin and Miami, Zoox spokesperson Marisa Wiggam said.
But Zoox’s rollout hasn’t been without hiccups.
The company issued a software recall in March for some of its test fleet to resolve a phantom braking issue that prompted a NHTSA investigation. Zoox also issued two voluntary software recalls in May after its robotaxi collided with an e-scooter rider in San Francisco and one of its vehicles was involved in a crash with a passenger car in Las Vegas.
The Amazon subsidiary has deployed a fleet of 50 robotaxis between San Francisco and Las Vegas, but Zoox is preparing to scale up. In June, the company opened a 220,000-square-foot factory in the San Francisco Bay Area, where it aims to produce 10,000 vehicles a year once it’s fully operational.
A vehicle Tesla is using for robotaxi testing purposes on Oltorf Street in Austin, Texas, US, on Sunday, June 22, 2025. The launch of Tesla Inc.’s driverless taxi service Sunday is set to begin modestly, with a handful of vehicles in limited areas of the city. Photographer: Tim Goessman/Bloomberg via Getty Images
Tim Goessman | Bloomberg | Getty Images
Tesla debuts ‘Robotaxis’ (with human safety drivers)
For more than a decade, Musk has promised that Tesla will “solve autonomy,” and that the company’s electric vehicles will soon be upgradeable into driverless robotaxis.
That still hasn’t happened, but Tesla kept the dream alive in 2025 by demonstrating a driverless delivery, where one of its electric vehicles navigated autonomously from the company’s Austin factory to a nearby customer’s doorstep in June.
At that time, the company also launched a Tesla Robotaxi pilot service in Austin and, soon after, a service in the San Francisco Bay Area called its “full self-driving” or FSD (Supervised) Rideshare.
All of Tesla’s vehicles for hire are hailed through its Robotaxi app. By September, Tesla made that app widely available. It also locked in a permit for AV testing in Nevada, and obtained a permit to operate a ride-hail service in Arizona, after previously securing permission to test self-driving cars there with a human safety driver on board.
The company has stirred controversy, and regulatory scrutiny, by recruiting test drivers in cities where it does not have permits to conduct any driverless operations — most notably New York, CNBC first reported in August.
In Tesla’s third-quarter earnings call in late October, Musk said the company expected to be operating a robotaxi service in Nevada, Florida and Arizona by the end of the year. That had not happened as of mid-December.
Tesla’s Robotaxi vehicles included human safety monitors on board as of mid-December. Those supervisors are supposed to be ready to take over steering or braking at any time.
But one California rider posted a video on Reddit in November showing a Tesla rideshare monitor asleep at the wheel. The NHTSA and California Public Utilities Commission told CNBC they were aware of the incident. CPUC said it was in touch with Tesla about it.
It’s unclear when Tesla will be able to run its ride-hail services without human supervisors. But on Sunday, Ashok Elluswamy, Tesla’s vice president of AI software, shared a post on X that said one of the company’s Model Y robotaxis was spotted driving on public roads in Austin without any people on board.
“Testing is underway with no occupants in the car,” Musk posted on Sunday.
Tesla did not respond to a request for comment.
In California, the company has yet to obtain the permits needed to run a commercial robotaxi service, according to the CPUC and the state’s Department of Motor Vehicles.
While all AV companies face uphill battles to prove the safety of their systems, Tesla’s driverless tech is drawing closer scrutiny. That’s in part because of the dozens of fatal collisions tied to its advanced driver assistance systems, currently marketed as Autopilot and FSD (Supervised) in the U.S., according to TeslaDeaths.com which tracks those incidents.
After launching its pilot service in Austin in late June, Tesla reported seven collisions involving its 2026 Model Y vehicles through Oct. 15 to NHTSA. Those vehicles were equipped with Tesla’s newer ADS, or “automated driving systems,” which are not yet widely available, and those collisions weren’t severe, according to the NHTSA data.
Musk in October said Tesla would be “paranoid about deployment because obviously even one incident will be front-page headline news.”
In November, Musk posted on X that Tesla would double its fleet of vehicles in the Austin area this month. That would put the fleet at 60 vehicles by year’s end, which is significantly less than an earlier stated goal of 500 robotaxis.
Still, Tesla bulls are betting that the automaker will evolve its cars and ride-hailing operations into fully driverless robotaxis in the year ahead, citing the company’s vast troves of data gathered from customers’ cars and updates to the FSD (Supervised) system in the past year.
And consumer interest in Tesla’s service is growing.
Launched in September, the Tesla Robotaxi-branded app has been installed 529,000 times as of Dec. 12, with an average of 2,790 downloads per day over the last 30 days, according to Apptopia. By comparison, Waymo’s app averaged 24,831 downloads per day over the same time frame, Apptopia said.
A Baidu Inc. Apollo Go autonomous driving electric vehicle displayed at the International Automotive and Supply Chain Expo in Hong Kong, China, on Thursday, June 12, 2025.
Chan Long Hei | Bloomberg | Getty Images
Formidable competition from China
Chinese rivals in 2025 posed a greater challenge to Waymo than its domestic competitors, as they continued to win market share in China and tiptoed into other countries.
Search giant Baidu ramped up its Apollo Go robotaxi this year, saying in October that it had surpassed 250,000 weekly driverless rides, which is on par with where Waymo was in April.
Apollo Go operates robotaxis in several major Chinese cities, including the suburbs of the capital city Beijing and the entire city of Wuhan.
It’s also working to expand to Abu Dhabi and Dubai in the United Arab Emirates, Guangzhou in China, Hong Kong and Switzerland. In August, the company announced a partnership with Lyft to bring its robotaxis to the U.K. and Germany in 2026.
In November, Apollo Go disclosed in a third-quarter update that it had received 17 million robotaxi ride orders and that its cars had driven 240 million kilometers (149 million miles), including 140 million fully driverless miles through September.
Meanwhile, Pony.ai and WeRide, both based in Guangzhou and listed in the U.S., have also rolled out service.
In 2025, Pony.ai got a permit to operate throughout Shenzhen, known as China’s Silicon Valley, and also operated a driverless robotaxi service in the suburbs of Beijing.
WeRide has focused more on ramping up overseas. The company began offering a robotaxi service in Abu Dhabi in November in partnership with Uber.
In October, WeRide and Uber also began offering robotaxi rides with human supervisors on board in Riyadh, Saudi Arabia, and the companies in May said that they planned to bring robotaxi service to several more cities, including in Europe, over the next five years.
On its own, WeRide offers robotaxi service in the Beijing and Guangzhou markets, the company told CNBC in a statement.
WeRide said its AVs are also deployed in Leuven, Belgium, and that it has obtained driverless permits for markets in France, Singapore, Switzerland and the U.S. The company said it currently has a fleet of 1,600 autonomous vehicles, which also include self-driving buses and autonomous street sweepers.
— CNBC’s Evelyn Cheng contributed reporting
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