**UK’s bid to become global AI hub in doubt after budget announcement**
UK Finance Minister Rachel Reeves has announced plans to increase taxes on businesses, including a hike in capital gains tax (CGT) and National Insurance (NI) contributions. The move has sparked concerns among British tech bosses and venture capitalists, who question whether the country can deliver on its bid to become a global artificial intelligence hub.
**Tax hikes spark concerns**
The lower capital gains tax rate has increased to 18% from 10%, while the higher rate has climbed to 24% from 20%. The lifetime limit for business asset disposal relief (BADR) has also been set at £1 million. The rate of CGT applied to entrepreneurs using the BADR scheme will increase to 14% in 2025 and to 18% a year later.
**Impact on tech sector**
Paul Taylor, CEO and co-founder of fintech firm Thought Machine, said the 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.
**Chances of building ‘the next Nvidia’ more slim**
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 UK. “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.
**National Wealth Fund to mobilize £70 billion in investment**
The UK government has 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.
**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.” However, he added that many firms would still welcome the “longer-term certainty and clarity provided, allowing them to plan and adapt effectively.”
**Uncertainty remains**
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.” He added that government support must go beyond these fiscal changes to ensure the UK’s entrepreneurial spirit continues to thrive.