The UK’s Autumn Budget, outlining government expenditures and revenues for the next financial year, takes place today. Chancellor Rachel Reeves is expected to announce significant changes, with some affecting businesses.
Most notably, it is believed that capital gains tax (CGT), which is charged on profits made from the sale of assets that have increased in value, may be increased. Additionally, business asset disposal relief (previously known as entrepreneurs’ relief) could be scrapped. The relief currently allows entrepreneurs to pay a reduced tax rate on qualifying gains, up to a lifetime cap of £1 million.
This additional tax burden could potentially affect alternative protein companies, many of which are small startups. It has been argued that increasing taxes on entrepreneurs who sell their businesses could discourage people from setting up companies in the first place, or prevent existing businesses from taking risks. Over 1,500 business leaders have sent a petition to Rachel Reeves urging her to reconsider the change.
However, critics of business asset disposal relief believe it disproportionately benefits wealthy entrepreneurs and does not lead to economic growth.
Government support for alt proteins
In recent years, the UK government has been relatively supportive of alternative proteins; for example, it has worked to accelerate the regulatory approval of cultivated meat to boost food security and sustainability. Earlier this year, Meatly became the first company to receive approval to produce and sell its cultivated chicken for pet food in the UK.
In December of 2023, the government unveiled its £2 billion National Vision for Engineering Biology, which aims to propel the country’s biotech ecosystem; this includes the cultivated meat and fermentation industries. And just two months ago, two government funding bodies announced a £15 million investment into a new innovation centre for plant-based, cultivated, and fermentation-derived foods.
However, the UK government has also been criticised for failing to do enough to reduce meat consumption. A report published last year found that few steps had been taken to achieve the 35% reduction in meat sales that would be necessary to meet the government’s net-zero target. Furthermore, a government-sponsored board has launched an advertising campaign promoting red meat consumption, which has been described as “irresponsible propaganda”.
Meatly CEO comments
Owen Ensor, CEO and founder of Meatly, the only approved cultivated meat company in the UK, has mixed opinions about the expected changes in the Budget.
“Whilst many might have been expecting the end of days with this budget, the Chancellor has delivered an incredibly measured budget with necessary cuts and increased investment that sends a message of hope.
“It’s great to see the retention of Entrepreneurs’ Relief, and also hugely encouraging to see further support and investment given to sectors such as life sciences and biotechnology, as well as the maintenance of the R&D tax credit. These changes should give start-ups and founders working within climate tech further confidence that the UK is serious about supporting these burgeoning industries.
“During this tough period, it’s understandable that a tax increase on Capital Gains would be warranted, however, the changes proposed by the Chancellor today are measured and reasonable. Although fellow entrepreneurs may grumble, it is worth remembering that an effective tax system is the financial cornerstone of a civilised society, and making sure everyone pays a fair amount of tax is critical.
“After all, a country with better finances on the whole is in a better position to support not just its public services but also its entrepreneurs, business leaders, startups and everything in between,” Ensor concludes.