Tom Jauncey started his business in the UK as a teenager eight years ago, but now, he says the policies introduced at last month’s Budget are making him consider moving his business elsewhere.
The chief executive of digital marketing agency Nautilus Marketing, based in London, said the minimum wage and national insurance increase, and an increase in capital gains tax (CGT) at Chancellor Rachel Reeves’s first fiscal event last month had made it harder to justify staying in the UK.
Mr Jauncey, 25, who started his agency in 2016, said that since the Budget, “it’s felt like one hit after another for small business owners”, and that he is considering upping sticks and moving to Cyprus.
Among other policies, Reeves told the Commons on 30 October that from April 2025, employers’ NI contributions will rise from 13.8 per cent to 15 per cent, and the minimum wage will also increase to £12.21 for adults over 21 and to £10 for 18 to 20-year-olds.
For Mr Jauncey, another policy – an increase in CGT – has also prompted him to consider his future.
CGT is a tax paid on the gains someone makes from an asset – such as if their shares or property increases in price. This can affect business owners who eventually want to sell their business for a profit. Although not as big as originally expected, Reeves increased the lower rate of CGT, paid by basic rate taxpayers, from 10 per cent to 18 per cent and the higher rate, paid by higher rate taxpayers, from 20 per cent to 24 per cent.
Mr Jauncey said: “Honestly, I’ve started seriously considering moving the business to Cyprus, where corporation tax [tax on company profits] is 12.5 per cent [half the UK rate of 25 per cent] and dividend tax [tax on payments to shareholders] is 0 per cent compared to the taxes we pay on dividends here.
“The tax burden here is just getting too much, and there’s no real incentive to push harder when most of what you make ends up going straight to the government.”
His team of 22 work remotely, so moving abroad wouldn’t make a huge difference to them.
But the entrepreneur said the rise in CGT would complicate things when selling the business.
He added: “If I do make the move, I would sell up in the UK and start a new company over in Cyprus, but if I do that, I’d lose so much of what I have worked for.
“It’s like there’s no winning move – stay and get taxed heavily or sell up and face the same issue.
“It’s a frustrating situation, and I wouldn’t be surprised if we see more businesses exploring opportunities abroad as a result.”
The Chancellor vowed to “protect our smallest companies” in Labour’s Budget last month – yet Mr Jauncey is one of several business owners who feel they will not benefit.
Employment allowance allows eligible employers to reduce their NI liability by up to £5,000 currently, and as part of her Budget, Reeves announced that this figure will increase to £10,500 in April 2025.
The initiative is designed to support smaller businesses with employment costs, allowing them to claim and pay less employer NI each time they run payroll until the full allowance is spent or the tax year ends.
Labour said this means that 865,000 employers won’t pay any NI at all next year, and over one million will pay the same or less than they did previously, but those helped are those with very small numbers of employees. As a result, employers like Mr Jauncey will not benefit.
He is not the only one concerned about what the future holds after the policy announcements.
Richard Simm, landlord of three pubs in Tunbridge Wells, Kent, said the changes announced in the Budget will “evaporate the large part of our bottom line”.
Mr Simm told i: “Money wise, each of my three pubs turns over roughly the same and the increases announced by Reeves are going to affect them roughly the same.
“Costs will rise by around £27,000 per pub as a result. That large figure speaks for itself. It comes in the context of a really tough five years, two years of Covid and a cost of living crisis that is ongoing. The latter has hit us from both directions – higher costs and customers with less money who come less often.”
“More often than not, it costs us more money to open than it would to close. The utility increases in particular make the colder months almost unviable.”
Mr Simm said the week after the Budget was “incredibly tough” as they tried to come up with a plan to mitigate the increases they are going to see.
He added: “Almost certainly, we will be opening less. Altering our operations to close in the quieter part of the week or even the quieter months of the year seems like the way to go.
“But nothing is off the table, up to and including disposing of one of them.
“The idea of selling is really upsetting. We’ve spent decades building the businesses and it will mean losing some old colleagues who’ve become friends, but something has to give.”