Britain faces warnings of a tech exodus over tax plans ahead of high-stakes budget
Britain’s Finance Minister Rachel Reeves has pledged to make the “necessary”, “urgent” and “incredibly tough” choices to restore the country’s economic stability.
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LONDON — British technology bosses and investors are warning that entrepreneurs may be forced to leave the U.K., if the government moves forward with controversial plans to raise capital gains tax on share sales.
Recent media reports have suggested Finance Minister Rachel Reeves is planning to hike capital gains tax (CGT) — which applies to the profit investors make on the sale of an investments — with The Guardian saying the levy could jump to 39%. Last week, U.K. Prime Minister Keir Starmer told Bloomberg that such speculation was “wide of the mark.”
Reeves is expected to announce sweeping fiscal changes during her Oct. 30 budget, as she seeks to close a multi-billion funding gap in public finances.
The government is also planning to increase capital gains tax on shares and other assets by “several percentage points,” the Times reported, meaning that those who sell their stakes in an acquisition, initial public offering or secondary share sale will be taxed on any gain in value.
Reeves also plans to cut the so-called business asset disposal relief (BADR), which allows entrepreneurs to pay a reduced 10% tax on profits from the sale of their firms, Bloomberg found.
CNBC has not been able to independently verify these reports. The Treasury did not immediately respond to a request for comment.
Several entrepreneurs and investors have warned that the U.K. could face an exodus of technology entrepreneurs as a result of the reported tax changes.
In an open letter to Reeves earlier this month, more than 500 entrepreneurs urged the finance minister to resist calls to hike capital gains tax or restrict the business asset disposal relief scheme.
“Higher CGT or any restrictions on BADR would make this relief less competitive at a time when the rest of the world is making their reliefs more competitive,” read the letter, published by The Entrepreneurs Network on Oct. 13.
“It would mean the UK has the second-highest CGT rate in Europe, and jeopardise the success of our country’s startup ecosystem by enormously weakening the incentive individuals have to build businesses.”
The list of signatories includes the likes of Giles Andrews, co-founder of digital bank Zopa, Rishi Khosla, CEO of financing platform OakNorth, and Victor Riparbelli, boss of artificial intelligence firm Synthesia.
They suggested that the plans would make it harder for entrepreneurs to build businesses in the U.K. — or indeed, force entrepreneur out of the country.
“By discouraging entrepreneurs from starting and growing their businesses, HM Treasury could well end up lowering the tax take overall,” the letter said.
“I’ve noticed a rising sense of stress in the U.K. tech ecosystem over proposals like this. If implemented, such a move would send a deeply negative signal,” Adam French, partner at seed investors Antler, told CNBC by email.
“There is a real risk of complacency in U.K. tech, in tandem with increasing competition from Paris and Berlin for talent, and a brain drain to the U.S.,” French added.
Harry Stebbings, a venture capitalist known for popular tech podcast “The Twenty Minute VC,” told The Guardian newspaper last week that entrepreneurs would leave the U.K. if the government raises capital gains tax.
Calling the government’s plan on capital gains tax the “biggest” issue for entrepreneurs, Stebbings said: “I know fewer entrepreneurs will be here. They will leave en masse.”
Not everyone agrees that capital gains tax shouldn’t be increased to raise public finances.
In a report by the center-left Institute for Public Policy Research published last week, a group of millionaire business owners said they would welcome an increase in the rate levied on capital gains to match the higher rate of income tax.
The analysis found that capital gains tax was not a primary driver of investment decisions, with entrepreneurs more focused on issues like access to financing, market opportunities and broader economic conditions.
Jensen Huang, NVIDIA founder and CEO, has a Q&A session at a press conference during the APEC CEO summit on October 31, 2025 in Gyeongju, South Korea.
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Even Nvidia CEO Jensen Huang couldn’t save the tech and artificial intelligence trade this week.
The chip giant’s talismanic leader trumpeted “off the charts” chip sales and dismissed talk of an “AI bubble,” and for a while, the tide lifted all boats.
“There’s been a lot of talk about an AI bubble,” Huang said during an earnings call this week. “From our vantage point, we see something very different.”
The buzz from the blowout report quickly reversed, sending the AI winners deeply into the red — and few beneficiaries were left unscathed.
Every member of the Magnificent 7, except for Alphabet, was tracking for a losing week, with Nvidia, Amazon and Microsoft staring down the biggest losses.
Amazon and Microsoft have led the group’s drop lower, falling about 6% this week. Meanwhile, Alphabet has gained nearly 8%. The search giant is also the only megacap of the group on pace for November gains thanks to a boost from the launch of Gemini 3.
Oracle, which is another major Nvidia customer, slumped about 10%. The chipmaker also supplies major model developers such as OpenAI and Anthropic.
Chip stocks have also declined amid the broader tech market turmoil. Advanced Micro Devices and Micron were on pace for 17% losses. Marvell Technology has slumped about 10%. Quantum computing stocks Rigetti, IonQ and D-Wave have dropped at least 10%
CoreWeave, which buys and rents out Nvidia’s chips in data centers, initially soared on the chipmaker’s earnings report, but swiftly reversed course. The company’s stock is looking at an 8% blow this week.
AI fever was cooling in the runup to Nvidia’s earnings report on Wednesday, and investors looked to the print to alleviate fears that the AI bubble was on shaky ground. Since the launch of ChatGPT in late 2022, the stock has helped power the market to new all-time highs.
But concerns have mounted in recent weeks as tech stocks hit stretched valuations.
Major investors, including Bridgewater’s Ray Dalio told CNBC Thursday that the market is definitely in a bubble.
Much of the worries have stemmed from a boom in capital expenditures spending to support AI, with few signs of a payoff in view for many of the players.
Investor Michael Burry recently accused some of the biggest cloud and infrastructure providers of understating depreciation expenses and estimating a longer life cycle for their chips, calling it “one of the more common frauds of the modern era.”
Earlier this month, Burry revealed bets against Nvidia and Palantir.
Shares of the software analytics company, which supplies AI tools to the government and businesses, are down 11% this week. The stock has shed nearly a quarter of its value this month.
WATCH: Bridgewater founder Ray Dalio: We are definitely in a bubble, but that doesn’t mean you should sell
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