{"id":206,"date":"2025-12-05T13:18:14","date_gmt":"2025-12-05T13:18:14","guid":{"rendered":"https:\/\/blogs.imperial.ac.uk\/csep-and-telecoms\/?p=206"},"modified":"2026-03-26T16:04:51","modified_gmt":"2026-03-26T16:04:51","slug":"summary-of-uk-budget-tax-changes-that-affect-knowledge-based-entrepreneurial-companies","status":"publish","type":"post","link":"https:\/\/blogs.imperial.ac.uk\/csep\/2025\/12\/05\/summary-of-uk-budget-tax-changes-that-affect-knowledge-based-entrepreneurial-companies\/","title":{"rendered":"Summary of UK budget tax changes that affect knowledge-based entrepreneurial companies"},"content":{"rendered":"

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Daniel Green<\/a>, Principal Fellow Entrepreneurship (Department of Bioengineering), discusses how the UK Budget\u2019s tax and investment changes could impact healthtech, biotech, and other knowledge-driven sectors.<\/span><\/em><\/p>\n

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Last week\u2019s UK budget had plenty that will (mostly) strengthen research-driven industries in the UK. One measure, a targeted cut in taxes on share trading, was foreshadowed in the CSEP report on the UK\u2019s Heathtech industry<\/a>. Other measures include more tax breaks for investing in later-stage private companies and, on the downside, a reduction in the tax benefits of investing through Venture Capital Trusts (VCTs).<\/p>\n

As always with a UK budget, the small print in is what counts. Here\u2019s a summary of tax-related measures that will affect all knowledge-based sectors where a thriving entrepreneurial environment is part the UK\u2019s growth story. We briefly discuss non-tax measures after this section.<\/p>\n

Four measures support that growth story, and two do not. First, the good news.<\/p>\n

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  1. The UK will be more attractive to early-stage investors through making UK IPOs more attractive. <\/strong>CSEP Healthtech report proposed the elimination of stamp duty tax from trading in shares post-IPO. The Budget announced this but limited to trading for three years post-IPO. This helps even start-up companies because since investors always have exit risks in mind.<\/li>\n
  2. Mid-stage private medtech, biotech and deep tech companies will be able to raise private investments more easily from UK tax-paying investors.<\/strong> Knowledge-intensive companies will be able to raise money under EIS and from VCTs to a max of \u00a340m (currently \u00a320m). This will especially help companies in life sciences and deeptech where many years of product development are needed before revenues overtake costs. The annual max rise from \u00a310-\u00a320m.<\/li>\n
  3. Attracting skilled employees into high-risk businesses will become easier (1). <\/strong>Entrepreneurial companies use shares and options to incentivise teams, and now companies up to 500 employees (250 previously) will be able do this under a favourable tax regime.<\/li>\n
  4. Attracting skilled employees into high-risk businesses will become easier (2). <\/strong>These tax breaks will remain if shares are sold via a new a new form of share trading called PISCES – an embryonic alternative to selling shares to sales on a recognised stock exchange.<\/li>\n<\/ol>\n

    And two measures that do not support the growth story (but may increase government tax revenues).<\/p>\n

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    1. Founders and potentially investors will pay more tax on some exits<\/strong>. Business Asset disposal relief (formerly Entrepreneurs\u2019 Relief) will go up from 14% to 18%.<\/li>\n
    2. Some investors will pay more tax when they invest. <\/strong>Income tax relief for VCTs will fall from 30% to 20%.<\/li>\n<\/ol>\n

      On a final positive note, in addition to these tax-related changes highlighted above, the government announced measures to increase and speed up grant funding (through UKRI) and equity investment (through the British Business Bank).<\/p>\n

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      References:<\/strong><\/p>\n