Chancellor Rachel Reeves' tax hikes 'punish risk-takers and could stifle innovation'

British tech entrepreneurs have criticised the increases in capital gains tax (CGT) and national insurance contributions (NICs) announced by Chancellor Rachel Reeves in the recent Budget.

The government has raised the lower rate of CGT from 10% to 18%, and the higher rate from 20% to 24%. Additionally, employers' NICs have been increased by 1.2 percentage points to 15%.

Paul Taylor, founder and CEO of the $2.7bn banking software company Thought Machine, expressed concerns that the rise in NICs would add £800,000 annually to his firm's UK payroll expenses and complicate recruitment efforts.

"Companies like ours will be less incentivised to grow once the contribution we have to pay, per employee, increases combined with forthcoming changes to employment legislation," he remarked.

"Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability.", as reported by City AM.

Furthermore, Taylor highlighted that the hike in CGT represents "a tax on risk-takers" and will "discourage talent from working in the tech sector".

"CGT increases mean the potential value of the shares they own will now be considerably lower, thus reducing the incentive for top talent to join high-growth and tech businesses, which is the future growth engine of the UK," he added.

Last month, Taylor communicated to City AM his ambitions to list Thought Machine on the London Stock Exchange, underscored by his belief that the US start-up scene serves as "a model of where the UK needs to be".

Labour's Reeves has pointed out that the Budget has introduced tax increases totalling £40bn in an effort to address what is claimed to be a £22bn "black hole" in public finances.

Capital Gains Tax (CGT), w