Over a hundred UK tech founders have signed a letter urging Boris Johnson to extend a key tax break to prevent the UK tech sector from experiencing possible shock from Brexit.
As reported by the Telegraph, the letter requests that policies should become more lenient regarding share options to strengthen the UK tech sector against competition from the US. This will also prevent the UK’s tech talent from being snatched by US tech giants such as Facebook and Google.
Share option schemes such as enterprise management incentives (EMIs) provide startups with tax relief upon cashing in their shares. These kinds of setup allow startups to cut down on costs by giving their staff competitive share options.
“What we have right now is competition from Facebook, Google, and all these tech giants,” said Onfido’s Chief Executive Husayn Kassai. “But many people have to take a pay cut to join a start-up. An executive might join at £50,000 when at traditional companies they would get three times that. The way to balance this is with share options.”
UK tech founders strongly recommend the HM Revenue & Customs (HMRC) to extend the current policies to bigger businesses since more than a hundred UK tech startups now surpass the qualifications.
Current rules state that, once a business exceeds 250 employees or £30m in assets, that business will no longer qualify for the EMI. In the letter, the UK tech founders demand that this be increased to £100m and 500 employees as UK startups continue its growth.
Among the UK businesses that signed the letter include fin-tech company, Revolut, transit app Citymapper, and online payment company, GoCardless.
According to the letter, “These companies are being forced to adopt less employee-friendly approaches, damaging their ability to attract, reward, and retain the best talent.”
If startup share options would increase in value, this would allow small firms to fairly compete with the big tech firms. Especially that the time’s near for the UK to leave the EU, one of the ways UK tech startups can survive Brexit is by hiring homegrown tech talents.
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