A few years ago, after we’d released our first Job Creators report, we invited the foreign-born founders of the UK’s fastest growing companies for a series of roundtables to talk about their decision behind choosing the UK to start and scale their business.

While they were an eclectic bunch, they had a few things in common. Notably, every single one of them was acutely aware before picking Britain to grow their business about the personal tax benefits of doing so, and cited it as a major contributing factor. At the time, we still had Entrepreneurs’ Relief and it didn’t look to be going anywhere. They were just stating facts: incentives matter.

Then, in 2020, Entrepreneurs’ Relief got downgraded to Business Asset Disposal Relief (BADR) with the lifetime limit reduced from £10 million to £1 million.

It’s Treasury orthodoxy that most people prior to starting their business don’t know about Entrepreneurs’ Relief. That might well be true on average, but what about extraordinary people? From those meetings I know for a fact that they know in detail what the UK’s offer is around personal taxation, and with the Chancellor on the lookout for £20 billion in cuts, there is a very real risk that even the diminished BADR could be under threat.

As The Economist argues (paywall), it was a mistake to rule out raising things like income tax and VAT, as these specific raids risk concentrating the pain: “The more levers Ms Reeves yanks, the higher the chance that she will experience what Lord Cameron faced with the Cornish pasty. Perhaps it will be farmers, dragged into inheritance tax for the first time. Maybe doctors, who now have a taste for striking, will not like their pensions being pilfered. Grumpy businessmen whacked by capital-gains tax may prove a formidable lobby group. Better to pick a larger tax – whether national insurance or vat – and make any outrage worth it. If a revolt is possible over a pasty, it is possible over a pension.”

Last time this was on the agenda, many entrepreneurs kicked off (paywall – The Times).

If I were the Chancellor I would do two things with BADR. First, I would change the rules so that it’s not available to those who are using it to disguise income tax. If you’re not a proper entrepreneur and taking proper risk, you shouldn’t be able to claim it.

Second, I would make BADR unlimited. Entrepreneurs who are building and selling companies for millions have an outsized impact on all our lives, and we should want as many of them in the UK as possible.

Finally, there are obviously ways of legitimately moving your company to a country with low or no Capital Gains Tax rates before sale. And while many entrepreneurs will prefer to exit in the UK and pay tax, don’t be surprised if more start to consider this option if we lose BADR. While I don’t think this negative argument is the one to lead on – the likely retort from the public is unlikely to be positive to people who are already rich – the Treasury should be alert to the fact that some entrepreneurs will feel justified with leaving given the risk that they’ve taken in choosing to be an entrepreneur.

Onward & Upwards
I’m delighted to share that Anastasia Bektimirova has joined us. She previously worked as a Senior Researcher in the Science and Technology team at Onward, focusing on emerging technologies, AI policy, and the UK’s R&D ecosystem. She was the lead researcher on a report exploring how the UK can build strategic advantage in the five priority technologies set out by the previous government: AI, engineering biology, quantum, semiconductors, and future telecoms.

Follow her on X or connect with her on LinkedIn. Her first project is focusing on how to bolster the special relationship between the UK and US. Drop her an email if you want to contribute to that or discuss any of the other areas she will be working on.

I’m also delighted to announce that Eamonn Ives has been promoted to Research Director. If you aren’t already doing so: follow him on X, connect with him on LinkedIn and drop him an email if you want to chat about our research agenda.

In addition, Cordelia Meacher, Founder of Fieldhouse Associates has become a Patron. As many of you will know, she is one of the most experienced and well-connected communications experts in the fast-growth tech ecosystem, with deep expertise in venture capital and investment. We’re going to be hosting some events together, so get in touch with me if you want to host us and our networks.

Finally, Anita Tiessen, CEO of Youth Business International (YBI) has joined us as an Adviser. Anita leads the only global network dedicated to youth entrepreneurship to develop and scale the most effective solutions to the critical challenges facing young entrepreneurs today. We’ve partnered with YBI on a number of reports, most recently Empowering the Future.

Tough enough
Are you an ambitious founder who can share your experience – potentially through a case study – on the mental toughness needed to build one or multiple companies? Or perhaps you’re an ecosystem influencer (for want of a better term) interested in contributing to a report on the topic? Or maybe you’re working in a corporate, VCs or accelerator with the power to act on the findings?

If so, we’re hosting Christina Richardson, Entrepreneurship Fellow at UCL, founder of entrepreneur-support community weare3Sixty, and Adviser to The Entrepreneurs Network to share preliminary insights from her latest research and give you the chance to get involved.