Some of Britain’s most prominent entrepreneurial voices are pressing the Treasury to introduce a targeted tax incentive designed to keep the proceeds of successful exits circulating within the domestic start-up ecosystem, rather than drifting into passive wealth management or overseas opportunities.
The proposal, which has been dubbed “repeat entrepreneur relief”, would allow founders who sell shares in their companies and reinvest the gains into a new venture within twelve months to defer capital gains tax indefinitely. The liability would only crystallise when the new shares were eventually sold without further reinvestment.
The idea has been put forward in various forms by the Founders Forum Group, Schroders and UK Private Capital as part of a recent Treasury consultation on the tax treatment of entrepreneurs. Each submission makes broadly the same case: that the UK’s tax framework does a reasonable job of supporting businesses as they grow, but does far too little to encourage founders to recycle their capital and experience once they have cashed out.
UK Private Capital, the trade body representing venture capital and private equity firms, argued there is a compelling rationale for aligning tax incentives with the post-exit phase, when founders hold significant capital, possess hard-won operational expertise and face decisions about where to base themselves and where to deploy their money next.
The Founders Forum Group, co-founded by Brent Hoberman and Jonnie Goodwin, drew a comparison with the American Qualified Small Business Stock scheme, under which founders pay no capital gains tax on gains of up to $10 million or ten times their original investment. The group described that exemption as a primary driver of the reinvestment culture that has long defined Silicon Valley, where exit proceeds are routinely funnelled straight back into the next generation of companies.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
