Last week, tax supremo Dan Neidle begged a small favour on X: “Please please don’t gossip about exit taxes. I know for a fact the exit tax rumours last summer caused some entrepreneurs to leave the UK.”
He’s right. I lost count of the number of entrepreneurs who told me they knew people who had left, and we got a fair number of responses to event invitations from people telling us they had left the country, while not mincing their words as to why.
He’s also right that if the next Government really is planning an exit tax, it is in HMRC’s interest — and that of taxpayers more broadly — that people don’t find out first, causing a mass exodus of wealth (and its creators).
It’s not just an exit tax entrepreneurs fear. The very real increase in capital gains tax (CGT) was enough to push many over the edge.
In truth, decisions haven’t even been finalised about who will make up the next Government, let alone what their policies will be. To quote Douglas Adams, with a healthy dose of irony: “Don’t panic.” However, as and when we actually have a new Government — including a new Chancellor — we will be asking them to rule out an exit tax for the very reason that Neidle cites.
If the new Government fails to rule it out, this doesn’t mean that we’ll definitely get one. When possible, governments like room for manoeuvre. But that automatically leaves space for rumours — particularly when government raises ideas like this to try to manage expectations. It is a clear sign of something failing in politics that, before budgets, governments now float policies they have no intention of passing just so interest groups feel relieved when the budget isn’t as bad as feared. Less 4D chess, more KerPlunk.
The Budget won’t be until October or November, but the deadline for steadying the nerves is a lot earlier than that. As one of the UK’s leading tax advisers told me on a call today, this is coming up in 80% of conversations with clients. I’ll finish with an email I received from an entrepreneur just yesterday:
“All this talk about raising CGT to the level of income tax? The natural inclination of me as an entrepreneur is to think about this, plan ahead and prepare to move. I am sure I am not alone. They have no idea of the uncertainty it causes. Once me and my family have gone we will have gone for good. I was always balancing CGT one way or another but while 24% is not great 40-50% is sufficient to make us leave. There will be many more tax exiles if it happens.”
Contract Killers
As many founders reading this will know all too well, most public contracts award around a tenth of the marks not for the thing being bought but for the supplier’s commitments alongside it — including training, jobs outside London, and Net Zero.
All are worthwhile goals, but as Joe Hill of the think tank Re:State argues, bolting them onto procurement as a toll for working with government is a poor way to pursue them.
It is, first, largely performative: suppliers promise, and nobody checks — policing it would cost more than government already manages to spend monitoring whether contracts are delivered at all. It also hits entrepreneurs hardest. While it might be trivial for the big “primes”, it’s a real burden for startups.
Nor is it free. Whatever suppliers do that they otherwise wouldn’t is folded into the price of the bid, so the taxpayer ends up funding a thousand sub-scale Net Zero initiatives and pretending it costs nothing because the bill is scattered across thousands of tenders. It is, in Hill’s phrase, “the worst kind of Everythingism.” As Hill has written previously:
“Everythingism is the belief that every proposal, project or policy is a means for promoting every national objective, all at the same time. Because of Everythingism, we never do any one thing well, we do everything badly. Housing policy becomes the main route for fixing the nitrogen imbalances in local rivers, and creating more social housing the main way of subsidising the welfare state. Trains must look after bats. Climate policy is to support the services sector.”
At heart, government — and society more broadly — has a deficient definition of social value. Everything government buys should be bought in the public’s service; delivering a contract well, at a fair price, is a social good of the first order. Priority number one, two, three, ad infinitum for public procurement should be to make it easier for good companies — especially new, innovative ones — to bid and win contracts, and easier for government to leave bad contracts behind.
Penningtons to Paper
As we grow from strength to strength, it’s becoming a weekly tradition to announce new Advisers to the network. This week we’re delighted to welcome Pat Saini and Matthew Martin from Penningtons Manches Cooper.
Penningtons will be our partner for the Job Creators 2026 report. You can read previous editions here. I’ve known Pat since founding The Entrepreneurs Network, and admired her work with Tech London Advocates and the Department for International Trade’s Global Entrepreneur Programme. Her expertise will be critical for ensuring that the report’s recommendations make a real difference.
If you would like to find out about becoming an Adviser, drop me an email.