The next UK Budget at the end of November isn’t just another fiscal announcement — it could reshape the entire startup investment landscape.

For months, we’ve all felt the uncertainty in the air: new taxes hinted at, old promises quietly re-worded, and a sense that innovation might be paying the bill for the country’s financial mess. Now it’s becoming clear what direction things are heading — and investors should be worried.

Rachel Reeves’ recent speech made one thing crystal clear: she needs to raise serious money fast.

She promised not to touch the usual suspects — NICs, Income Tax, VAT — but left the door wide open for targeted measures that hit LLPs, venture funds, and high-growth investors. In other words, she might not tax “working people”… but she might well tax the people creating their jobs.

The Treasury is reportedly exploring adding National Insurance contributions to LLPs, which could hike total taxes on some venture funds by 30%. Combine that with last year’s carried-interest reforms and you get a perfect storm — one that could make it almost impossible for new funds to launch in the UK.

The result?

If that happens, London won’t lose its startup scene overnight — but it will slowly bleed talent and capital to friendlier markets.

Reeves says she wants to “supercharge innovation.” But you can’t supercharge something while cutting the fuel line.

Innovation doesn’t happen in a vacuum; it happens when risk capital feels confident enough to back people before the numbers make sense. Every new tax on LLPs, funds, and capital gains sends the opposite message: you’re not welcome here.

Add to that her refusal (so far) to update SEIS, EIS, or Venture Capital Trust incentives — the very schemes that made the UK Europe’s top destination for early-stage investment — and it starts to feel like policy driven by spreadsheets, not by strategy.

As if that wasn’t enough, the proposed exit tax could be catastrophic for founders and investors.

On paper, it sounds simple: a 20% tax on assets when people leave the UK. In practice, it means taxing unrealised gains — the paper value of shares that haven’t been sold and might never be.

Imagine your founder moves abroad to expand the company. Their shares are valued at £20 million. They haven’t sold them. They don’t have £4 million lying around — but HMRC still wants the tax.

If those shares later become worthless? Too bad.

That’s not “taxing the rich.” That’s punishing the very people building global businesses out of Britain — and sending a clear message to investors: don’t back UK talent too early, because the government might trap your founders later.

This is how capital confidence collapses — not with one bad policy, but with a slow accumulation of short-sighted decisions that make staying here feel like charity work.

For angels and VCs, the implications go far beyond accounting.

If LLPs become unviable and the exit tax goes through, the ripple effects will hit every stage:

And yet, the government will still claim it’s “supporting innovation” because an “Innovation Unit” has been set up. It’s like building a new runway while shutting down the airports.

If the goal is to rebuild the economy through growth, the answer isn’t squeezing the risk-takers — it’s empowering them.

The UK could easily protect and even strengthen its position by:

That’s what a real “pro-innovation” budget would look like.

The frustration in the ecosystem is real. When I posted about the exit tax last week, over 300 investors and founders commented within days. Everyone feels it — but feeling angry isn’t enough.

If we want to protect the UK’s position as one of the world’s best startup ecosystems, we have to speak up now, before the budget is finalised.

That’s why the Startup Coalition has drafted an open letter to the Chancellor opposing the exit tax and urging the government to protect venture capital and early-stage investors from punitive reforms.

✍️ Sign it. Share it. Make noise.

This isn’t just about one tax. It’s about whether the UK remains a place worth investing in.

👉 Sign the Open Letter Here

Investors understand risk better than anyone — but what’s being proposed isn’t risk, it’s recklessness.

If the government wants to raise revenue, it should back the people creating value, not drive them away. The next few weeks will show whether the UK wants to lead in innovation or tax it out of existence.

Let’s make sure our voices are heard before the damage is done.

✅ If this hit home, forward it to your network. The more investors aware of Europe’s capital gap, the faster we fix it - and the stronger the next generation of European winners becomes.

(👉 Vote now — we’ll share the results in next week’s issue. All votes are anonymous)😀

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