I have had a UK business for eight years. I might move to Cyprus because of the budget

Tom Jauncey started his business in the UK eight years ago as a teenager, but now he says policies introduced in last month’s Budget are making him think about taking his business elsewhere.

The managing director of London-based digital marketing agency Nautilus Marketing said increases in the minimum wage and national insurance, as well as an increase in capital gains tax (CGT), at Chancellor Rachel Reeves’ first financial event last month had made it harder to justify staying in the country Great Britain.

Mr Jauncey, 25, who founded his agency in 2016, said that since the budget was passed “it feels like one blow after another for small business owners” and that he is considering taking another look and moving to Cyprus.

Among other things, Reeves told the House of Commons on October 30 that from April 2025, employers’ NI contributions will rise from 13.8 percent to 15 percent and the minimum wage will rise to £12.21 for adults over 21 and £10 for adults become 18 to 20 year olds.

For Mr Jauncey, another policy – ​​an increase in capital gains tax – has also caused him to consider his future.

Capital gains tax (CGT) is a tax paid on the profits someone makes from an asset – for example if the price of their shares or property rises. This can affect entrepreneurs who ultimately want to sell their business for a profit. Although not as high as originally expected, Reeves increased the lower rate of CGT paid by basic rate taxpayers from 10 percent to 18 percent and the higher rate paid by higher rate taxpayers from 20 percent to 24 Percent.

Mr Jauncey said: “Honestly, I have seriously considered moving the company 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 in Cyprus) is shareholders) is 0 percent compared to the taxes we pay on dividends here.

“The tax burden here is simply becoming too great, and there is no real incentive to apply more pressure when most of what you earn goes directly to the state.”

His team of 22 works remotely, so moving abroad wouldn’t make much of a difference for them.

However, the entrepreneur said the rise in capital gains tax would complicate matters when selling the business.

He added: “If I make the move I would sell in the UK and start a new company in Cyprus, but if I do that I would lose so much of what I have worked for.”

“It’s as if there is no decisive step: stay and pay high taxes, or sell it and face the same problem.

“It’s a frustrating situation and I wouldn’t be surprised if we see more companies exploring opportunities abroad as a result.”

The Chancellor promised to “protect our smallest businesses” in the Labor Budget last month – but Mr Jauncey is one of several business owners who feel they will not benefit from this.

The Employment Allowance currently allows eligible employers to reduce their NI liability by up to £5,000 and as part of her Budget, Reeves announced this amount will rise to £10,500 in April 2025.

The initiative aims to support smaller businesses with staff costs by allowing them to claim and pay less employer NI on each payroll until the full allowance is spent or the tax year ends.

Labor said this meant 865,000 employers would pay no national insurance contributions at all next year and over a million would pay the same or less than before, but those who were helped have a very small number of workers. Employers like Mr Jauncey will therefore not benefit.

He’s not the only one worried about what the future holds after the political announcements.

Richard Simm, landlord of three pubs in Tunbridge Wells, Kent, said the changes announced in the Budget would “destroy most of our profits”.

Mr. Simm told us I: “Monetarily speaking, the turnover of each of my three pubs is about the same and the increases announced by Reeves will have about the same impact on them.

“This will increase costs by around £27,000 per pub. This large number speaks for itself. This comes against a backdrop of a really difficult five years, two Covid years and an ongoing cost of living crisis. The latter hits us from both directions – higher costs and customers with less money who come less often.”

“In most cases it costs us more money to open than to close. In particular, the increased benefits make the colder months almost unprofitable.”

Mr Simm said in the week following the budget’s passage it was “incredibly difficult” to come up with a plan to mitigate the impending increases.

He added: “We will almost certainly open less. Changing our operations to close during the quieter times of the week or even the quieter months of the year seems to be the right way to go.

“But nothing is off the table, up to and including selling one of them.”

“The thought of selling is really upsetting. We have spent decades building the companies and that means we will have to lose some old colleagues who have become friends, but something has to happen.”