Founders Share Expectations For The October Budget After Speech

PM Keir Stramer has prepared the public for a tough budget announcement in October, revealing a shortfall of £22 billion in public finances. During his speech at Downing Street, he said that the wealthiest would be hit the hardest. Starmer stressed that while the upcoming budget measures might be unpopular, they are necessary to correct past fiscal mismanagement. He reassured that his administration wants to avoid taking income tax, national insurance or VAT up further. Instead, they intend to focus on more targeted fiscal strategies.

 

What Are The Reactions To This Announcement

 

The response to Starmer’s preview of the budget has been mixed, with some being worried about the economic impact this cut will have. Critics, particularly from the Conservative party, argue that Labour’s plan to increase taxes is a long-planned strategy rather than an immediate necessity.

The decision to cut winter fuel payments, among other austerity measures, has not sat well with some members of his own party, revealing a tension within Labour ranks over these fiscal choices.

 

What Are Experts Saying?

 

The discovery of a substantial financial shortfall necessitates changes in the UK’s economic policy, likely leading to tax increases and spending reductions that were not previously planned. This situation puts the Labour government in a difficult position, as it needs to manage economic recovery and fiscal rectitude while trying to maintain support from the public and political allies.

The government’s plan to avoid hikes in well-known taxes like income tax and VAT suggests a reliance on less prominent fiscal tools, such as changes to capital gains tax and adjustments to non-domicile status.

Founders have shared their views on how these changes will affect businneses, and startups. These are their thoughts:

 

Our Experts:

 

Adrian Vlad, Portfolio Manager, Wealth Manager Sidekick
Michael Queenan, CEO and Co-Founder, Nephos Technologies
Johan du Plessis, Founder, tepeo.
Ben Waterman, Founder & CEO, Strabo
Ammar Akhtar, Founder and CEO, Finalrentals
Dan Buckley, CEO, Cognexo
Wilson Chan, Founder, Permutable AI
Paul Beare, Founder and MD, Paul Beare Limited
Nick Thompson, CEO, BOW

 

Adrian Vlad, Portfolio Manager, Wealth Manager Sidekick

 

 

“Starmer’s comment, in particular his omission of the previous vow to keep corporation tax unchanged at 25 per cent raises concerns about the potential impact on business sentiment. Increasing corporate taxes could erode investor confidence and discourage investment in UK companies.

“With investors already shying away from UK businesses due to various factors including Brexit, and corporates increasingly choosing to list across the Atlantic, raising corporate taxes could further alienate them. This could lead to a decrease in investment, job creation, and ultimately economic growth. Therefore it is crucial for the UK government to carefully consider the implications of its fiscal policies on business confidence and the overall investment climate.”

 

Michael Queenan, CEO and Co-Founder, Nephos Technologies

 

 

“The October budget should be aiming to raise GDP and employment rates, but Labour’s rumoured plans to raise capital gains and inheritance tax will have the opposite effect. We need to encourage people to start businesses. To do this, we need the opposite of these potential policies – increased R&D tax relief, lower corporation tax rates, reduced capital gains and inheritance tax. The government should be investing in areas and subsidising startups that will generate jobs and grow the economy. Only then can we even begin to get out of the debt that the country is in.

“The taxation system in the UK is currently crushing for a small to midsize business and now billed to get worse fast. There are no longer incentives for entrepreneurs to start a business here. In today’s globalised world, we’re competing with wealthy countries like Dubai, who are offering 0% corporation tax, 0% income tax, and 0% capital gains tax.

“The news that Labour plans to increase capital gains tax and inheritance tax could be the final nail in the coffin. Why would you start a business in the UK if your hard work is going to be worth less when you want to take the value from it? Where is the incentive to take the risk? And then your family gets hit by more taxation when you pass it to them? The Labour government will be chasing entrepreneurs out of the UK.

“If I would have known when starting a business that down the line I would be crushed by taxation, I would have thought twice about leaving my well-paid, secure job. If it is no longer the case of building something for the future, then there is no purpose.”

 

Johan du Plessis, Founder, tepeo.

 

 

“The Secretary of State for Energy Security and Net Zero has expressed a commitment to decarbonising millions more households. By widening the list of Energy Saving Materials (ESM) to include heat batteries, the government can fulfil this ambition and support households in making sustainable choices that suit their unique needs.”

 

Ben Waterman, Founder & CEO, Strabo

 

 

“Rumours around this October’s budget and early thoughts from PM Keir Starmer suggest that we can expect a tightening of fiscal policy with a particular emphasis on middle to high earners. This will likely come in the form of increased capital gains and inheritance tax rates, amongst others.

“While there is no doubt that some belt tightening needs to be done, I find it disappointing how much focus is put on increasing taxes to the country’s productive endeavours rather than also reducing spending. It is very difficult to feel like the country is encouraging any kind of entrepreneurial pursuit or fostering an environment where small businesses and tech startups can prosper.

“Their success feels increasingly like it happens in spite of political movement rather than as a result of it. We can only hope that our treasured EIS and SEIS concessions remain in place! I personally will be staying in London and I hope that we can weather this difficult time and return to a global economic position that we can be proud of.”

 

 

Ammar Akhtar, Founder and CEO, Finalrentals

 

 

“Higher Corporation Tax would be a deterrent, but schemes like R&D tax relief could act as a balancing factor. However, I believe the UK could benefit from lowering Corporation Tax to levels closer to those in Ireland, which would foster a more competitive business environment.

“I would suggest increasing the SEIS cap from £250K to £500K and raising the starting threshold for income tax from £12,000 to £18,000. This would provide significant relief to freelancers, remote workers, and solo entrepreneurs, enabling them to manage inflation better and improve their quality of life with more disposable income, especially those earning £18K a year.”

 

Dan Buckley, CEO, Cognexo

 

 

“My hopes for the upcoming Autumn budget focus on addressing the critical challenges small businesses face, especially with the proposed capital gains tax. The government needs to prioritise policies that foster SME growth and entrepreneurship, rather than policies that deter it.

“There needs to be greater access to funding, and incentives to attract investment, and SMEs also need affordable access to technology, government support for digital adoption, training, and development, and this needs to be indepthly addressed by the government.

“I would also expect to see focus on initiatives that make it easier for SMEs to bid for government or corporate contracts to ensure fair competition.

“Most importantly, there needs to be greater investment in skills and mental health support, to enhance employee engagement, and tackle recruitment, hiring and retainment issues.”

 

Wilson Chan, Founder, Permutable AI

 

 

“As a startup founder, I’m hoping for a solid push from the government to boost innovation in AI, and that they will send a strong signal that the UK wants to lead in this area. Likely changes in capital gains tax and carried interest taxation will bring new new hurdles for those of us who are dependent on the venture capital world for growth and investment. My hope is that there will be new and much needed perks for startups to help us to grow and develop, that will help us move on from the current tough environment which not very startup-friendly.”

 

Paul Beare, Founder and MD, Paul Beare Limited

 

 

“The UK’s tax system is in need of serious reform. Take VAT registration– it’s a vital part of business operations and gets cash into HMRC to help fund government, but we need to see improvements, specifically when it comes to turnaround times.

“The second tax issue is CGT. We would like to see no adjustments, in order to continue to encourage overseas investors holding property in the UK. Also, there should be no tax on second or third properties for those [individuals] already domiciled in the UK.

“Then there’s immigration – it’s a political hot potato but business needs certainty. In practice that means better access to support and a quicker turnaround on times for processing sponsor applications (licences) and answering basic queries. The fact is, foreign migrants form a big pool of talent that can’t be utilised, so reforming that would benefit all of the UK.

“Perhaps the biggest single issue we see affecting our clients, especially startups and those expanding into the UK from overseas, is bank account opening. It might seem basic, but foreign companies are often rejected for banking services without cause. Banks have a checklist for compliance, sure, but they must strike a balance between identifying genuine companies and fraudulent operations.

“Then, if the UK is serious about regaining its position as an innovation leader, it needs to improve the current R&D tax credit regime. This is key for attracting tech companies in particular to move their IP to the UK. Addressing this would help re-establish the UK as an attractive place to HQ businesses, operate and grow.

“Finally, it would be helpful to see reform of the current investment properties regime. Many properties are in personal individuals’ names, and a lot are individuals‘ pensions. So imposing higher CGT is akin to taxing pension pots which surely flies in the face of encouraging individuals to save for retirement.”

 

Nick Thompson, CEO, BOW

 

 

“I’m hoping for increased investment in robotics R&D in the upcoming Budget. With the UK’s recent drop from the top 10 manufacturing nations, it’s clear we need a robust, long-term industrial strategy, and robotics will play a pivotal role in this revitalisation.

“Robotics also presents a tremendous opportunity to help the UK meet our net-zero targets. With the right R&D investment, BOW’s technology can accelerate the deployment of robotics in key sectors like offshore wind farms, making a significant impact on the Green Prosperity Plan and Great British Energy.

“I also hope to see more funding for UKRI-backed projects and expanded international collaborations, such as the UK-Germany Accelerator, which we are a part of. These initiatives are incredibly beneficial to start-ups like ours, as they help demonstrate the UK as a competitive hub for investment and innovation.

“Our platform BOW, is removing the complexities associated with robotics programming and development, allowing millions of software developers to seamlessly become roboticists, ultimately creating new jobs and setting better foundations for the future both economically and environmentally.”