Higher taxes will make it harder for Britain to build ‘the next Nvidia,’ tech execs say

Published

11 months ago

November 1, 2024

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UK Finance Minister Rachel Reeves makes a speech during the Labour Party Conference that is held at the ACC Liverpool Convention Center in Liverpool, UK on September 23, 2024.

Anadolu | Getty Images

LONDON — British tech bosses and venture capitalists are questioning whether the country can deliver on its bid to become a global artificial intelligence hub after the government set out plans to increase taxes on businesses.

On Wednesday, Finance Minister Rachel Reeves announced a move to hike capital gains tax (CGT) — a levy on the profit investors make from the sale of an investment — as part of a far-reaching announcement on the Labour government’s fiscal spending and tax plans.

The lower capital gains tax rate was increased to 18% from 10%, while the higher rate climbed to 24% from 20%. Reeves said the increases will help bring in £2.5 billion ($3.2 billion) of additional capital to the public purses.

It was also announced that the lifetime limit for business asset disposal relief (BADR) — which offers entrepreneurs a reduced rate on the level of tax paid on capital gains resulting from the sale of all or part of a company — would sit at £1 million.

She added that the rate of CGT applied to entrepreneurs using the BADR scheme will increase to 14% in 2025 and to 18% a year later. Still, Reeves said the U.K. would still have the lowest capital gains tax rate of any European G7 economy.

The hikes were less severe than previously feared — but the push toward a higher tax environment for corporates stoked the concern of several tech executives and investors, with many suggesting the move would lead to higher inflation and a slowdown in hiring.

On top of increases to CGT, the government also raised the rate of National Insurance (NI) contributions, a tax on earnings. Reeves forecasted the move would raise £25 billion per year — by far the largest revenue raising measure in a raft of pledges that were made Wednesday.

Paul Taylor, CEO and co-founder of fintech firm Thought Machine, said that hike to NI rates would lead to an additional £800,000 in payroll spending for his business.

“This is a significant amount for companies like us, which rely on investor capital and already face cost pressures and targets,” he noted.

“Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability,” added Taylor, who sits on the lobbying group Unicorn Council for U.K. FinTech. “The U.S. startup and entrepreneurial environment is a model of where the U.K. needs to be.”

Chances of building ‘the next Nvidia’ more slim

Another increase to taxation by way of a rise in the tax rate for carried interest — the level of tax applied to the share of profit a fund manager makes from a private equity investment.

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Reeves announced that the rate of tax on carried interest, which is charged on capital gains, would rise to 32%, up from 28% currently.

Haakon Overli, co-founder of European venture capital firm Dawn Capital, said that increases to capital gains tax could make it harder for the next Nvidia to be built in the U.K.

“If we are to have the next NVIDIA built in the UK, it will come from a company born from venture capital investment,” Overli said by email.

“The tax returns from creating such a company, which is worth more than the FTSE 100 put together, would dwarf any gains from increasing the take from venture capital today.”

The government is carrying out further consultation with industry stakeholders on plans to up taxes on carried interest. Anne Glover, CEO of Amadeus Capital, an early investor in Arm, said this was a good thing.

“The Chancellor has clearly listened to some of the concerns of investors and business leaders,” she said, adding that talks on carried interest reforms must be “equally as productive and engaged.”

Britain also committed to mobilizing £70 billion of investment through the recently formed National Wealth Fund — a state-backed investment platform modelled on sovereign wealth vehicles such as Norway’s Government Pension Fund Global and Saudi Arabia’s Public Investment Fund.

This, Glover added, “aligns with our belief that investment in technology will ultimately lead to long term growth.”

She nevertheless urged the government to look seriously at mandating that pension funds diversify their allocation to riskier assets like venture capital — a common ask from VCs to boost the U.K. tech sector.

Clarity welcomed

Steve Hare, CEO of accounting software firm Sage, said the budget would mean “significant challenges for UK businesses, especially SMBs, who will face the impact of rising employer National Insurance contributions and minimum wage increases in the months ahead.”

Even so, he added that many firms would still welcome the “longer-term certainty and clarity provided, allowing them to plan and adapt effectively.”

Meanwhile, Sean Reddington, founder and CEO of educational technology firm Thrive, said that higher CGT rates mean tech entrepreneurs will face “greater costs when selling assets,” while the rise in employer NI contributions “could impact hiring decisions.”

“For a sustainable business environment, government support must go beyond these fiscal changes,” Reddington said. “While clearer tax communication is positive, it’s unlikely to offset the pressures of heightened taxation and rising debt on small businesses and the self-employed.”

He added, “The crucial question is how businesses can maintain profitability with increased costs. Government support is essential to offset these new burdens and ensure the UK’s entrepreneurial spirit continues to thrive.”

Technology

Tesla’s stock erases loss for the year, soaring 85% from April low

Published

4 hours ago

September 15, 2025

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Tesla's stock erases loss for the year, soaring 85% from April low

Tesla CEO Elon Musk attends the Saudi-U.S. Investment Forum, in Riyadh, Saudi Arabia, May 13, 2025.

Hamad I Mohammed | Reuters

Tesla’s shares have finally turned positive for the year.

After a dismal first quarter, which was the worst for the stock in any period since 2022, and a brutal start to April, following President Donald Trump’s announcement of sweeping new tariffs, Wall Street has again rallied around the electric vehicle maker.

The stock rose 3.6% on Monday to $410.26, topping its closing price of 2024 by over $6. It’s up 85% since bottoming for the year at $221.86 on April 4. A new filing revealed that CEO Elon Musk purchased about $1 billion worth of shares in the company through his family foundation.

It’s the second straight year Tesla has bounced back after a down first quarter. Last year, the shares fell 29% in the first three months before ending up 63% for 2024.

In recent weeks, analysts have praised the EV maker’s proposed pay plan for Musk, which could amount to a $1 trillion windfall for the world’s richest person over the next decade. The company has also gotten a boost from its new MegaBlocks battery energy storage systems that Tesla ships preassembled to businesses looking to lower their power costs or make greater use of electricity from renewable resources.

Even with the rebound, Tesla is the second-worst performer this year among tech’s megacaps, ahead of only Apple, which is down about 5% in 2025. Tesla is still in the midst of a multi-quarter sales slump due to an aging lineup of EVs and increased competition from lower-cost competitors in China, namely BYD.

Tesla has seen a consumer backlash, in part because of Musk’s political activities, including spending nearly $300 million to propel President Trump back to the White House and his work with the Trump administration to slash the federal workforce.

Tesla leadership has been working to shift investors’ attention to other topics such as robotaxis and humanoid robots.

However, the company has yet to deliver vehicles that are safe to use without a human onboard and ready to take control if needed. And while Musk is touting Tesla’s Optimus robots, which he says will be able to do everything from factory work to babysitting, a product is still a long way from hitting the market.

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Technology

Alphabet becomes fourth company to reach $3 trillion market cap

Published

9 hours ago

September 15, 2025

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Alphabet becomes fourth company to reach trillion market cap

Google CEO Sundar Pichai gestures to the crowd during Google’s annual I/O developers conference in Mountain View, California on May 20, 2025.

Camille Cohen | Afp | Getty Images

Alphabet has joined the $3 trillion club.

Shares of the search giant jumped more than 4% on Monday, pushing the company into territory occupied only by Nvidia, Microsoft and Apple.

The stock got a big lift in early September from an antitrust ruling by a judge, whose penalties came in lighter than shareholders feared. The U.S. Department of Justice wanted Google to be forced to divest its Chrome browser, and last year a district court ruled that the company held an illegal monopoly in search and related advertising.

But Judge Amit Mehta decided against the most severe consequences proposed by the DOJ, which sent shares soaring to a record. After the big rally, President Donald Trump congratulated the company and called it “a very good day.”

Bessent: TikTok deal ‘framework’ reached with China, Trump and Xi will finalize it Friday

Published

11 hours ago

September 15, 2025

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Bessent: TikTok deal 'framework' reached with China, Trump and Xi will finalize it Friday

Samuel Boivin | Nurphoto | Getty Images

The U.S. and China have reached a ‘framework’ deal for social media platform TikTok, Treasury Secretary Scott Bessent said Monday.

“It’s between two private parties, but the commercial terms have been agreed upon,” he said from U.S.-China talks in Madrid.

Both President Donald Trump and Chinese President Xi Jinping will meet Friday to discuss the terms. Trump also said in a Truth Social post Monday that a deal was reached “on a ‘certain’ company that young people in our Country very much wanted to save.”

Bessent indicated that the framework could pivot the platform to U.S.-controlled ownership.

TikTok did not immediately respond to a request for comment.

The comments came during the latest round of trade discussions between the U.S. and China. Relations have soured between the two countries in recent months from Trump’s tariffs and other trade restrictions.

At the same time, TikTok parent company ByteDance faces a Sept. 17 deadline to divest the platform’s U.S. business or face being shut down in the country.

U.S. Trade Representative Jamieson Greer said Monday that the deadline may need to be pushed back to get the deal signed, but there won’t be ongoing extensions.