Venture capital and private equity leaders are seeking insights from UK's Rachel Reeves regarding their sector's needs and potential reforms.
The British Private Equity and Venture Capital Association (BVCA), led by CEO Michael Moore, has proposed a series of pragmatic and growth-oriented tax changes to stimulate investment and business in the UK.
Moore's suggestions, discussed during the July 3, 2025 CMA Growth and Investment Council meeting, focus on policies that enhance the UK's competitiveness and incentivize investment through tax means.
One of the key proposals is the enhancement of tax treatment and valuation clarity for equity-based management incentive plans (MIPs). This would help align investor and management rewards, minimizing tax risks and promoting business growth and investment.
Another proposal is the encouragement of equity rollovers and refined exit structures that facilitate investment recycling and reinvestment. These changes aim to promote liquidity and growth in privately held companies.
The BVCA also supports reforms in capital markets alongside taxation to enable the growth of private companies. This includes the development of new trading venues like PISCES (Private Intermittent Securities and Capital Exchange System), which indirectly reflects the environment in which such tax reforms are considered to unlock private market growth and investment opportunities.
In addition, the government has taken action on regulatory reform focused on growth. This includes measures aimed at improving capital markets infrastructure and public sector investment and infrastructure boosts.
The Chancellor, Rachel Reeves, has demonstrated a commitment to delivering growth through investment. However, it is crucial for the government to be mindful of the burden it places on working people's incomes while pursuing these measures.
Removing constraints on Enterprise Management Incentive (EMI) reliefs at later growth stages could also boost SMEs. Loose talk of a 'wealth tax' is hitting investor confidence, and the government must make their rejection of a potential asset tax explicit to ensure the UK remains open for business.
The abolition of the non-dom regime, partially inherited from the previous government, risks making it harder for international investors to do business in the UK. The government must address this issue to maintain the UK's attractiveness to international investors.
Pension reforms have been made to boost investment into private assets, and continuing to drive forward reforms to pensions and wider capital markets can promote investment further.
In 2024, there was a 44% increase in private capital investment in the UK compared to 2023, reaching £29.4bn. This growth needs investment funded by UK and international capital, and the BVCA and its CEO are ready to contribute to this investment.
The changes to taxation of carried interest, while more pragmatic than feared, should be seen alongside other measures. Raising thresholds, particularly for knowledge-intensive companies, and merging R&D tax relief schemes into a unified system with higher rates for R&D-intensive SMEs would support science and technology scale-ups and regional growth.
Removing tax uncertainty and focusing on these measures can be a route for the UK to invest its way out of its long-standing growth malaise. The BVCA's proposals, if implemented, could help the UK become a more attractive destination for private equity, venture capital, and business investment.
- Michael Moore, the CEO of the British Private Equity and Venture Capital Association (BVCA), suggested enhancing tax treatment and valuation clarity for equity-based management incentive plans (MIPs) to promote business growth and investment by aligning investor and management rewards.
- The BVCA's proposals also include the encouragement of equity rollovers and refined exit structures to facilitate investment recycling, reinvestment, and promote liquidity and growth in privately held companies.
- The BVCA, led by CEO Michael Moore, supports reforms in capital markets and taxes, such as the development of new trading venues like PISCES, raising thresholds for knowledge-intensive companies, and merging R&D tax relief schemes into a unified system with higher rates for R&D-intensive SMEs, to stimulate investment and growth, particularly in science and technology scale-ups and regional growth.
