UK tables tax-raising budget, offers entrepreneurs some scale-up boost

UK Chancellor Rachel Reeves on Wednesday tabled the Labour Party government’s second budget in Parliament with a range of tax rises worth around 26 billion pounds, including a surcharge on wealthy properties and a tax on online gambling.

The Autumn Statement kept corporation tax levels for businesses at 25 per cent, with some incentives introduced for entrepreneurs looking to scale-up their operations and a listings relief to attract more businesses going public in the UK.

Reeves was also keen to highlight what she dubbed as her “inflation-busting decisions”, by cutting 150 pounds off energy bills, freezing rail fares and lifting thousands of children out of poverty by abolishing a two-child benefits cap for families.

“I can tell you today that for every family, we are keeping our promise to get energy bills down and cut the cost of living with 150 pounds taken off the average household energy bill from April,” said Reeves.

“Money off bills, and in the pockets of working people. That is my choice,” she said.

However, it was her announcement to freeze the income-tax thresholds for an additional three years from 2028 that brings nearly 2 million more people into the higher tax bracket that has dominated the headlines.

”I am asking everyone to make a contribution, but I can keep that contribution as low as possible because I will make further reforms to our tax system today to make it fairer and to ensure the wealthiest contribute the most,” stated Reeves.

The focus on the wealthy includes a so-called ”mansion tax” on properties worth over 2 million pounds. A further 2.1 billion is expected to be raised through increasing tax rates on dividends, property and savings income by two percentage points.

There will also be a new mileage tax for electric vehicles from April 2028, and online gambling faces higher rates of taxation, including remote gaming duty being raised to 40 per cent and duty on online betting increased to 25 per cent.

For entrepreneurs, the Chancellor’s message was: “If you build here, Britain will back you.” This involves widening the eligibility requirements for the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT) to broaden access to investment incentives for firms to be able to move from the startup to scale-up stage.

To encourage companies to choose the UK as their destination for an IPO, the Chancellor announced a three-year exemption from stamp duty for businesses going public in the UK. Additionally, Reeves announced the launch of an evidence gathering exercise with entrepreneurs to further adjust tax policy to support founders of new enterprises.

”Today’s budget builds on the choices we have made since last July: to cut NHS waiting lists, to cut the cost of living, and to cut the debt and borrowing. No doubt, we will face opposition again. But I have yet to see a credible, or a fairer alternative plan for working people,” concluded Reeves.

However, the finance minister’s much-anticipated Autumn Statement in the Commons was overshadowed by an embarrassing leak of the independent Office for Budget Responsibility (OBR) forecasts ahead of time, blamed on a “technical error”. It meant that Reeves’ policies were already in the public domain even before she had a chance to table it in Parliament.

”It is my understanding that the Office of Budget Responsibility’s economic and financial outlook was released on their website before this statement. This is deeply disappointing and a serious error on their part,” said Reeves.

The OBR has launched an investigation into the damaging leak and will report on its findings.

While the global bond markets settled down after an initial shake-up over the leak, the business response to the Budget was quite mixed as the Confederation of British Industry (CBI) warned of an “economy stuck in neutral”.

”The government should be commended for protecting capital spending, boosting innovation, sticking with the corporate tax roadmap, and hiring the planning officers business asked for. But business will still rue a missed opportunity to be bold and press on with much needed tax reform, simplification and alignment of incentives to catalyse business investment and job creation,” said Rain Newton-Smith, CBI Chief Executive.

”Adding National Insurance to salary sacrifice pension contributions curtails savings and pushes up the cost of employment. Coming on top of the rise to the National Living Wage, increased employment costs make it even more expensive for employers to offer jobs to young people and jobseekers,” she said.