Summary:
Founders need more certainty on tax. Rule out further equalisation of Capital Gains Tax (CGT) with Income Tax and hold the Business Asset Disposal Relief (BADR) rate for the rest of this Parliament. Restore the lifetime limit to £10 million, tied to reinvestment in UK businesses. In our polling, 62% of founders told us they know another founder who left Britain after Autumn Budget 2024.
Lock in the value of the limits uprated at Autumn Budget 2025. Index the EMI, EIS and VCT gross asset and investment limits to inflation with automatic annual uprating so the April 2026 increases hold their real value. Separately, make SAFEs eligible for SEIS and EIS relief, scrap the financial health test and resource HMRC's advance assurance team.
Fix the administration of R&D tax relief. UK support for business R&D is among the world’s most generous, but HMRC’s fraud crackdown has had a chilling effect on valid claims. Build on the HMRC–CIOT work and resource compliance teams so valid claims are processed promptly and rejections can be appealed.
Fund a callback service for growth-relevant queries and surface eligible reliefs inside Making Tax Digital software, since a large majority of founders know of no reliefs they could claim.
Remove structural barriers beyond the tax code. Review abolition of Stamp Duty Reserve Tax (SDRT) within a wider business tax review, close the £700 million online marketplace VAT gap, reset procurement rules that use static financial-health criteria and extend scaleup visa fee reimbursement to founders.
This submission sets out policies from our research and reports that we believe address the areas HM Treasury has asked representations to speak to: effectiveness and value for money, revenue implications for the Exchequer, contribution to growth, and wider macroeconomic and deliverability considerations.
Recommendations
1. Rule out equalising Capital Gains Tax (CGT) with Income Tax
Business Asset Disposal Relief (BADR; previously Entrepreneurs' Relief) has changed six times since 2010. Its lifetime limit moved from £1 million to £2 million, to £5 million, to £10 million, back to £1 million, before being rebranded, while its rate has ratcheted from 10%, to 14%, and subsequently to 18%, the last increase landing in April 2026. A 20% charge on unrealised gains at the border was floated at Autumn Budget 2025 but ultimately dropped, leading to uncertainties. In our polling, 62% of founders told us they know another founder who left Britain after the Autumn Budget 2024.
Recommendation: rule out further equalisation of CGT with Income Tax and commit to a stable rate of BADR for the remainder of this Parliament. This carries no immediate revenue cost and directly addresses the certainty that founders repeatedly tell us they need to commit capital long-term in the UK.
2. Restore the Business Asset Disposal Relief lifetime limit to £10 million, tied to reinvestment
Restoring the BADR lifetime limit to where Entrepreneurs’ Relief sat, conditional on the proceeds being reinvested in UK businesses, would recycle exited capital back into the ecosystem rather than losing it to consumption or emigration.
In our Entrepreneurs Survey, 72% of founders said they would reinvest the proceeds of a more generous relief into someone else’s startup, and 70% said they would use it to launch another venture. Sweden’s 2003 reform, which deferred tax on gains from unlisted shares reinvested in other unlisted companies, has been left untouched for two decades. Sweden now produces more unicorns per head than almost any other country.
Recommendation: restore the BADR lifetime limit to £10 million where it stood as Entrepreneurs' Relief, conditional on reinvestment, to ensure any revenue cost is offset by recycled capital rather than a one-off windfall.
3. Index investment tax relief thresholds to inflation
Autumn Budget 2025 made a substantial and welcome correction. The EMI employee limit was doubled to 500, the gross assets limit rose from £30 million to £120 million, the option pool doubled to £6 million and the exercise window extended from 10 to 15 years. EIS and VCT limits rose in parallel. That correction was necessary only because the original limits, set in 2000, went unindexed for a quarter of a century. Absent indexation the same erosion restarted in April 2026. Indexation is how the Government protects the value of what it has just bought.
Recommendation: index the gross asset and investment limits on EMI, SEIS and EIS to inflation, with automatic annual uprating. This is a low-cost, high-certainty change that removes the need for repeated lobbying simply to preserve the reliefs' existing real value.
4. Fix the plumbing on the venture capital schemes
Three fixes recommended in the APPG for Entrepreneurship's Funding to Flourish report remain outstanding three years on. First, make SAFE (Simple Agreement for Future Equity) notes eligible for SEIS and EIS relief, rather than voiding relief when they do not convert to equity within six months. Second, scrap the 2014 financial health test, which arbitrarily disqualifies any company whose liabilities exceed its assets or that has spent more than half the capital it has raised — a test that catches ordinary, high-potential early-stage companies rather than only failing ones. Third, properly resource HMRC's EIS/SEIS advance assurance team so that it can put a clarifying question to an applicant, rather than simply refusing in silence.
Recommendation: implement all three Funding to Flourish fixes in the next Finance Bill. None requires new primary legislation on the scale of a new relief, and each removes friction from schemes the Government has already committed to.
5. Restore confidence in the administration of R&D tax relief
R&D tax relief has incentivised private-sector research since 2000, allowing companies to claim relief above the normal corporation tax deduction available for business expenses. Following the merger of the SME and RDEC schemes from April 2024, profitable companies can now claim a 20% taxable expenditure credit, and loss-making companies a 16.2% subsidy, for every qualifying pound of R&D spend, with an enhanced rate for 'R&D-intensive' SMEs that spend at least 30% of relevant expenditure on research. In 2023-24, the most recent year for which provisional data is available, £7.6 billion of relief was claimed, corresponding to £46.1 billion of R&D expenditure. Measured as a share of GDP, the UK's support for business R&D is among the most generous in the world — ahead of France, the United States and Japan.
The problem is not the relief's generosity but its administration. HMRC's own statistics now show it. The number of claims fell 26% in 2023-24 to 46,950, with SME scheme relief down 29%, in the first full year requiring an Additional Information Form on every claim. A fall of that size in twelve months is not explained by a contraction in research activity, which HMRC records as down 1%.
HMRC’s crackdown on fraudulent claims has, by the Chartered Institute of Taxation’s own account, created a chilling effect. Valid claims are being rejected, and businesses that try to challenge those rejections are deterred by the disproportionate cost and time involved, finding it very difficult to get a hearing for their case. This matters to founders directly — in our June 2025 Entrepreneurs Survey, respondents named R&D tax credits, describing them as one of the strongest forces in the UK ecosystem, as being scaled down, and cited this among their reasons for considering leaving Britain altogether.
Recommendation: build on the work already underway between HMRC and the CIOT to fix the administration of claims, properly resourcing HMRC's compliance teams — funded, where possible, from money no longer lost to fraudulent claims — so that valid claims are processed promptly and rejections can be meaningfully appealed. A relief this generous only changes behaviour if the businesses it is designed for can access it.
6. Abolish Stamp Duty Reserve Tax
Autumn Budget 2025 introduced UK Listing Relief, exempting trades in newly UK-listed companies from SDRT for three years. This was welcome and narrow. It reaches only new main-market listings and leaves the bias against UK-listed equities untouched for everything already listed. The underlying problem remains. SDRT taxes both the investment and the return on it, including when that return is negative, and revenue has fallen considerably in real terms over the past two decades.
Recommendation: commit to a review of abolishing SDRT as part of a broader review of business taxes, exemptions and reliefs. If abolition is not affordable this year, we recommend the Government at minimum set out a clear direction of travel and timeline.
7. Treat HMRC as growth infrastructure
Founders overwhelmingly report that engaging with HMRC has become a barrier to growth, whether that is waiting months for a clarifying response during advance assurance, or being unable to get through to discuss a straightforward query. A relief nobody can navigate does not change behaviour: our research found that a large majority of founders knew of no reliefs they could claim.
Recommendation: fund a proper callback service for businesses engaging with HMRC on growth-relevant queries, and surface eligible reliefs directly inside Making Tax Digital software so that take-up follows entitlement rather than accountancy fees or word of mouth.
8. Reset public procurement rather than layering on more rules
Our Building Blocks research found that single-bid tenders rose fivefold between 2012 and 2018, despite public procurement being worth around 15% of GDP, of which only a tenth reaches SMEs. Rules that automatically screen out companies with negative EBITDA or a light balance sheet continue to exclude normal, high-growth technology companies from public contracts even after specific cases have been reinstated on appeal.
Recommendation: review procurement rules that use static financial-health criteria as an eligibility gate, rather than adding further compliance requirements on top of the existing framework.
9. Cut the cost of coming to Britain and hiring here
A founder arriving alone on an Innovator Founder visa pays £6,862, rising to £18,694 for a partner and two children, with the Immigration Health Surcharge payable upfront for the full duration of the visa. The reimbursement scheme introduced for scaleup employees this year does not extend to founders themselves. Our research and polling consistently show the outsized contribution that foreign-born founders make to Britain's fastest-growing companies.
Recommendation: extend the scaleup visa fee reimbursement scheme to cover founders, and review Innovator Founder visa fees in line with those charged by comparable competitor economies.
10. Regulate sterling stablecoins for growth
Our research on stablecoin regulation makes the case for principles-based rules on transparency, reserve backing and custody, rather than redemption obligations and holding caps set low enough to rule out corporate treasury use altogether. Sterling stablecoins are backed by gilts, at a moment when the cost of servicing government debt is at its highest in decades.
Recommendation: adopt a proportionate, principles-based regulatory regime for sterling-denominated stablecoins that allows legitimate business use cases to develop, rather than one that forecloses them by default.
11. Close the online marketplace VAT gap
Overseas sellers on online marketplaces continue to avoid charging VAT in some circumstances, giving them an effective 20% price advantage over UK-based competitors. Extending liability rules to close this gap has been under consultation for some time without further action, despite an estimated £700 million a year of recoverable revenue.
Recommendation: bring forward the outstanding consultation on extending online marketplace VAT liability rules, and commit to a timeline for implementation.
About us
The Entrepreneurs Network (TEN) is a think tank for Britain's most ambitious entrepreneurs. We are the Secretariat of the All-Party Parliamentary Group for Entrepreneurship, and our recommendations above draw on our published research, our network of over 10,000 entrepreneurs, and our regular polling of founders through the Entrepreneurs Survey.