Finance
UK’s Labour hikes capital gains tax by less than feared
On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”. (Photo by Oli Scarff/Getty Images)
Oli Scarff | Getty Images
LONDON — Britain’s Labour government on Wednesday announced plans to raise the rate of capital gains tax on share sales, news that offered some relief for technology entrepreneurs who feared a more intense tax raid on the wealthy.
Finance Minister Rachel Reeves on Wednesday hiked capital gains tax (CGT) — a levy on the profit investors make from the sale of an investment — as part of her far-reaching budget announcement. The lower capital gains tax rate will be increased to 18% from 10%, while the higher rate will climb to 24% from 20%, Reeves said. The tax hikes are expected to bring in £2.5 billion.
“We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances,” Reeves said, adding that, even with the higher rate, the U.K. would “still have the lowest capital-gains tax rate of any European G7 economy.”
Reeves maintained the £1 million lifetime limit on capital gains from the sale of all or part of a company under business asset disposal relief (BADR), quashing fears from entrepreneurs that the tax relief scheme for entrepreneurs would be scrapped.
However, she added that the rate of CGT applied to entrepreneurs selling all or part of their business under BADR will be increased to 14% in 2025 and 18% a year later. She stressed that this still represented a “significant gap compared to the higher rate of capital gains tax.”
In a less welcome move for businesses, Reeves also announced plans to increase the rate of National Insurance (NI) — a tax on earnings — for employers. The current rate is 13.8% on a worker’s earnings above £9,100 per year. This is set to rise to 15% on salaries above £5,000 a year.
The changes form only a small part of sweeping fiscal changes the recently-elected Labour government laid out in its debut budget Wednesday in an attempt to close a multibillion-pound funding gap in public finances.
‘Brain drain’ feared
Reeves’ announcement comes after speculation over capital gains tax changes caused a backlash from tech founders and investors. Even prior to Reeves’ announcement, the anticipation that CGT would increase had caused angst for tech founders across the country.
On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”
A survey of 713 founders and investors conducted by Startup Coalition with private company database Beauhurst, showed that 89% of those polled would consider moving themselves or their business abroad, with 72% having already explored this possibility.
The survey data also showed that 94% of founders would consider starting a future company outside of the U.K. if the government were to raise the CGT rate.
Dom Hallas, executive director of Startup Coalition, said that while the survey findings were grim, he doesn’t expect founders will “flee if things get hard” as they “aren’t naive about the role of taxes in society.”
Following Reeves’ budget speech, Hallas told CNBC via text message that, “Any budget with increases to CGT and NI, gradual increases to BADR and taxes on investors going up, is never easy and today will be hard for founders seeing taxes on their businesses rise.”
However, he added: “We appreciate that the Government has listened to ensure that entrepreneurs’ biggest fears have not materialised and some balance has been struck including maintaining all important R&D [research and development] investment.”
Barney Hussey-Yeo, CEO and co-founder of financial technology app Cleo, told CNBC last week he was considering a move to the U.S. as a result of Labour’s tax plans.
“There’s so many founders already leaving, or already considering leaving — and they’re excited to go to Silicon Valley,” Hussey-Yeo told CNBC on the sidelines of venture capital firm Accel’s EMEA Fintech Summit in London last week.
Hussey-Yeo didn’t respond to a request for comment Wednesday on whether he still plans to move abroad. However, he told CNBC that the budget announcement was “better than I thought it would be,” adding it “seems like they listened” to entrepreneurs.
Focus on growth-oriented policy
Tech entrepreneurs and investors are urging the government to return to its focus on fostering growth and innovation in the U.K., messages which were key to Labour’s election manifesto prior to the landslide win that saw Keir Starmer become prime minister.
“We’re already seeing early-stage firms in the UK struggle securing pre-seed and seed funding, with VCs here having a lower risk appetite. A higher CGT will act as a further deterrent,” Phil Kwok, co-founder of EasyA, an e-learning startup, told CNBC via email.
“With all the factors at play, we could see investors and the next generation of founders looking to another markets like the U.S.,” he added.
Hannah Seal, a partner at Index Ventures, told CNBC that the government should “pursue reforms that make it easier for startups to attract talent through employee ownership and ensure all regulators prioritise innovation and growth.”
“Startup-friendly policies like these will be essential to signal the U.K.’s commitment to remaining a globally competitive hub for innovation, especially in light of today’s announcements,” she added.
Edgar Randall, managing director of U.K. and Ireland at data and analytics firm Dun & Bradstreet, told CNBC that in order to remain competitive, the government should “weigh the cumulative effect of policies impacting growth.”
These include policies impacting energy costs, employer National Insurance contributions, and tax structures on capital gains and dividends.
Ultimately, “business decisions are influenced on more than just fiscal policy,” Randall said, adding that. ‘entrepreneurs look at the ecosystems [as] a whole.”
Jakub Porzycki | Nurphoto | Getty Images
Bitcoin fell below the $79,000 level as investors braced for more financial market volatility after U.S. equites suffered their worst decline since 2020 on the rollout of President Donald Trump’s restrictive global tariffs.
The price of bitcoin was last lower by 4% at $78,835.07, according to Coin Metrics, after trading above the $80,000 for most of this year — barring a couple brief blips below it amid recent volatility. It’s off its January all-time high by about 34%.
Although the flagship cryptocurrency usually trades like a big tech stock and is often viewed by traders as a leading indicator of market sentiment, it bucked the broader market meltdown last week – holding in the $80,000 to $90,000 range and rising to end the week as stocks tumbled and even gold fell.
Other cryptocurrencies suffered bigger losses overnight. Ether and the token tied to Solana tumbled 9% each.
Bitcoin’s down move triggered a wave of long liquidations, as traders betting on an increase in its price were forced to sell their assets to cover their losses. In the past 24 hours, bitcoin has seen more than $181 million in long liquidations, according to CoinGlass. Ether saw $188 million in long liquidations in the same period.
Bitcoin has traded mostly above $80,000 in 2025
Rattled investors dumped their holdings of cryptocurrencies, which trade 24 hours, over the weekend as they anticipated further carnage, after Trump’s retaliatory tariffs raised global recession fears and caused investors to sell all risk.
The duties on all imports, in addition to custom tariffs for major trading partners, have sparked worries of a global trade war that could lead the U.S. into a recession. Growing concerns about the far-reaching impact of the tariffs sent markets reeling worldwide.
In the two sessions following the tariff announcement, global stocks wiped out $7.46 trillion in market value based on the market cap of the S&P Global Broad Market Index, according to S&P Dow Jones Indices.
That figure includes $5.87 trillion lost in the U.S. stock market over those two sessions and another $1.59 trillion loss in market value in other major global markets.
Bitcoin is down 15% in 2025 and, absent a crypto-specific catalyst, is expected to continue moving in tandem with equities as global recession fears overshadow any regulatory tailwinds crypto was expected to benefit from this year.
Finance
Buffett denies social media rumors after Trump shares wild claim that investor backs president crashing market
Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.
Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.
“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.
The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”
The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.
Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.
“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.
CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.
‘A tax on goods’
While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”
“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”
During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.
“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”
Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail.
-
Economics1 week agoPCE inflation February 2025:
-
Accounting1 week agoIRS sets new initiative with banks to uncover fraud
-
Economics1 week agoConsumer sentiment worsens as inflation fears grow, University of Michigan survey shows
-
Blog Post1 week agoRecording Loan Transactions and Interest Payments for Financial Accuracy
-
Leaders1 week agoMark Cuban is The Maverick Entrepreneur Changing Business and Beyond
-
Personal Finance1 week agoThese big inherited IRA mistakes can shrink your windfall
-
Technology1 week agoQuantum Computing is Transforming Industries, Security, and Future Technologies
-
Economics1 week agoChecks and Balance newsletter: Who is (or was) the smartest person in government?