John Caudwell warns Labour tax hikes could drive entrepreneurs abroad

John Caudwell, the founder of Phones 4u, has publicly accused Labour of breaking the pro‑business pledges that won him support in the 2024 election. In an opinion piece, he urged the new Chancellor to halt a series of tax increases that, he argues, make the UK a less attractive place for founders to invest, employ and expand.

Britain cannot tax its entrepreneurs into staying.

Caudwell points to the erosion of several reliefs that were designed to reward risk‑taking. Business Asset Disposal Relief, which capped tax on the sale of a qualifying business at 10 per cent until April 2025, will rise to 14 per cent and has already been set at 18 per cent since April. At the same time, Employers’ National Insurance contributions and Capital Gains Tax have been lifted, while reliefs for business and agricultural property have been narrowed.

Tax changes and their impact

The cumulative effect of higher rates and reduced reliefs is already being felt. Official data show more than 53,000 companies in “critical financial distress” in the second quarter of this year, with another 675,000 in “significant distress”. Caudwell argues that each of these firms represents jobs and tax revenue that could be lost if founders relocate.

International competition and the risk of capital flight

He notes that rival jurisdictions are courting UK entrepreneurs with more favourable regimes. In the UAE, a qualifying business sale attracts zero tax on the first $15 million; Spain, Singapore, Monaco and Italy also offer attractive terms. A recent analysis by Rathbones of Companies House filings found nearly 6,000 business owners left the UK in the two years to January 2026, technology founders being the largest group.

Caudwell says the solution is not ideological but practical: reverse the increase in Employers’ National Insurance, restore reliefs to their previous levels and provide long‑term certainty on business taxation. He adds that the Treasury could also achieve savings by improving public‑sector efficiency, citing a potential £12 billion gain from a 1 per cent cut in spending.

Budget outlook

The upcoming Budget on 28 October is the decisive moment, according to Caudwell. A pro‑business budget could persuade founders to keep their next ventures in the UK; a misstep may accelerate the exodus, weakening growth and job creation across the country.

He also calls for a more aggressive inward‑investment strategy, arguing that the government should actively court global firms that can bring jobs, technology and intellectual property to Britain. "I would much rather see the Treasury improve efficiency before raising taxes again," he writes.

While Andy Burnham's pro‑business stance has been welcomed, Caudwell stresses that policy, not rhetoric, will determine whether the UK retains its entrepreneurial talent.

As the budget approaches, the pressure is on Labour to reconcile its promises with fiscal reality, or risk losing the very founders who drive innovation and employment.