Start-ups warn Reeves over Budget tax bombshell

A lobbying radical representing UK start-ups volition this week pass Rachel Reeves against a taxation raid connected constricted liability partnerships (LLPs), arguing that it would deed the backers of Britain's astir innovative companies.

Sky News has seen a missive to beryllium sent to the chancellor connected Monday, successful which the Startup Coalition volition reason that imposing employers' National Insurance Contributions (NICs) connected task superior funds could marque UK money launches "commercially unviable".

Venture superior firms, on with backstage equity firms, instrumentality firms and accountants were alarmed past week by speculation that Ms Reeves was readying to rise adjacent to £2bn by taxing LLPs successful this way.

Treasury officials are said to beryllium successful talks astir the determination up of adjacent month's important Budget statement.

"Combined with past year's carried involvement reforms, this is the 2nd Budget wherever VC risks collateral harm from policies not designed for it - and the operation of these changes could rise VCs' wide taxation load by astir 30%," Dom Hallas, enforcement manager of the Startup Coalition, volition accidental successful the letter.

"Any further taxation connected concern profits straight reduces the moving superior disposable to concern teams.

"For emerging managers, often operating astatine oregon beneath outgo successful their aboriginal funds, these changes could marque UK money launches commercially unviable.

"For much established funds, they would accelerate an existing trend: partners and decision-makers relocating to different jurisdictions.

"Fewer UK partners mean less meetings with British founders, less word sheets signed here, and little superior flowing into high-growth British companies."

The group's involution risks embarrassing the chancellor, fixed her pledge connected Friday to "supercharge innovation" with a caller portion aimed astatine alleged scale-up companies.

Mr Hallas's missive volition telephone connected the chancellor to support task superior money structures from caller taxes "while allowing the authorities to marque changes to the wider LLP authorities oregon akin areas".

He volition besides impulse her to "differentiate [venture capital] from backstage equity successful the taxation system, aligning attraction with its public-interest relation successful innovation".