The chancellor’s autumn budget was an attempt to balance the ambitions of government, pressure from backbenchers, and the realities of starved public finances. It was an impossible task for Rachel Reeves to please everyone, but did she please the tech sector?
From welcoming pledges for new AI zones, a £187 million TechFirst skills boost and a series of reforms to the tax‑advantaged funding regime that underpins the UK’s start‑up engine to fears of increased taxes driving away investment, tech leaders told us what they thought of Reeves’ budget.
Funding reforms – longer‑term incentives for scale‑ups
The most praise was for the Enterprise Investment Scheme’s overhaul, and the first substantive update to the EMI programme in two decades.
The change allows start-ups to take a longer-term view. Rather than being forced to sell equity early, start-ups can hold capital — and retain talent — for longer. Many highlighted that it allowed for better strategic thinking.
Todd Latham of Attest, a consumer research platform, said, “Britain’s biggest business challenge isn’t building new startups. It’s incentivising promising young scale-ups – tomorrow’s enterprises – to stay, grow and list here in the UK.” He continued, “the chancellor’s reform of the EMI scheme is genuinely transformational. Extending the maximum holding period beyond the 10-year exercise window more accurately reflects the growth timelines of modern high-innovation businesses.”
Tom Leathes, co-founder and CEO of Motorway, an online marketplace, added that the higher EMI employee cap and the 15‑year option life “help scale‑ups attract, retain and reward world‑class talent long into their growth.”
The extension of EIS to 2035 also earned a welcome from Dame Anne Glover of Amadeus Capital Partners, who said it provided “the certainty and stability that both entrepreneurs and investors need to build and scale high-growth businesses in the UK.”
Tax hikes – a long-term drag on capital
However, that warm welcome was partially offset by a suite of tax changes that have made some investors uneasy. Peter Briffett, co‑founder of the payroll‑tech firm Stream, warned that “reduced Capital Gains Tax relief on employee ownership trusts — as well as tax rises on dividends — is only likely to further reduce confidence in entrepreneurs seeking to establish and grow new businesses in the UK.” When many start-ups use equity as part of their reward packages, reducing the value of tax-efficient ownership may have an impact on attracting talent.
Nigel Green of deVere Group, an international independent financial advisory and wealth management organisation, was even more blunt, saying it would “drive an exodus of wealth from Britain “ and that it was “a masterclass in disincentivising saving and investing.”
AI and skills – infrastructure needs talent to work with it
On the technology front, the budget announced three AI growth zones, an AI for Science strategy and a £100 million market commitment for UK AI hardware. Professor Rachid Hourizi, director of the Institute of Coding, warned that AI is not just about the hardware; without an AI-skilled workforce, the hardware may go underused. “The investment in artificial intelligence is most welcome,” Hourizi said. “But its success will depend on ensuring people – not just technology – are ready to use it.”
Catherine Lenson of Phoenix Court, a London-based venture capital firm, highlighted the practical side of the AI announcements: “the Government focus on AI infrastructure, a new AI for Science Strategy published a few days ago, and a £100m advanced market commitment for UK AI hardware.” Delivering on these would, she said, “give deeptech founders the confidence to build here, scale here, and turn scientific breakthroughs into global businesses.“
Regional ecosystem – the mycelial network
While the UK has some significant tech centres, a key part of the wider government policy is to encourage growth nationwide, including seeing the tech sector succeed outside traditional centres like London or Silicon Fen. Steven Drost, co‑founder of CodeBase, a growth platform for tech ecosystems, perhaps chose an unattractive fungal parallel to describe the UK tech landscape as “a mycelial network – a system where talent, ideas, and investment move through invisible connections. When those connections are strong, whole regions thrive.”
Jamie Roberts of YFM Equity Partners pointed to the VCT rule change as a concrete way to feed that network: “The shift in the VCT qualifying rules to include more established businesses is a real game changer… It recognises ambition exists everywhere, and now the investment can too.” By widening the window for VCT, the budget gives regional firms access to the same patient capital that London start‑ups have long enjoyed.
Drost also cited Scotland’s Techscaler programme as proof that targeted, locally‑driven initiatives can amplify the mycelial effect, linking founders with mentors, educators, and investors regardless of postcode.
Long‑term stability – the real test
Even the most generous reforms will flop if they are not delivered consistently. Dame Anne Glover warned that “the success of these measures will depend on swift implementation and continued collaboration between government, industry, and investors.”
Jamie Roberts summed up the overarching requirement, when capital cycles within the sector, retaining it owes more to consistent policy than one-off tax breaks. “What matters now is a policy environment that gives growing companies the confidence to invest, hire and innovate,” he said. “A consistent long‑term approach will be key to ensuring UK businesses continue to thrive.”
Finally, Drost echoed the sentiment, adding that “if the UK commits to building the infrastructure and partnerships that underpin a healthy tech ecosystem, it can cement its place as one of the best nations in the world to start and scale a company.”
A firm foundation or a tax gamble
For a chancellor, every budget can become a matter of faith. Calls for investment are balanced by demands that taxes cannot be raised to pay for it; Reeves’ view seems to be that the return on investment is worth far more than the risk of capital moving elsewhere.
Whether threats to invest elsewhere are real or bluff, a country with strong investment in tech and a stable, startup-friendly policy is likely to remain an attractive prospect for founders and investors after Reeves’ budget.
