He argues that the findings highlight a once in a generation opportunity to both strengthen the public finances and supercharge the UK’s entrepreneurial economy. The policy has been developed to attract wealth creators to found businesses in the UK and generate a greater entrepreneurial culture, something he believes is essential to sustainable growth. The modelling, conducted by the Centre for Economics and Business Research (Cebr), shows that while fiscal gains vary depending on business creation and productivity levels, the Treasury stands to benefit significantly under all but the most extreme downside scenarios.  

At its heart, the proposed reform would provide entrepreneurs with certainty and incentive: paying a flat £5,000 fee up front in exchange for a reduced CGT rate of 10% upon disposal of their business. This removes the current cap on Business Asset Disposal Relief, levelling the playing field for founders who create and grow companies that drive employment, innovation, and investment.

 Research insights: scenario modelling

Cebr’s analysis demonstrates how different combinations of business creation and productivity growth shape the potential fiscal return of the policy:

• High business creation & high productivity: net gains could surge to £11 billion within five years, £47 billion by Year 15, and almost £100 billion by Year 25
• High business creation & low productivity: gains are slower, with £3 billion by Year 5, £15 billion by Year 15, and £37 billion by Year 25
• Low business creation & high productivity (central case): gains of £2 billion by Year 5, £9 billion by Year 15, and £24 billion by Year 25
• Low business creation & low productivity (pessimistic case): near-zero impact in early years, but still £12 billion annually by Year 25

In all cases, there is a long-term net benefit from introducing this CGT policy initiative. By highlighting this range, the research underscores the strong potential of reform to deliver long-term fiscal dividends while encouraging more entrepreneurship.

Commenting on the research, Ryan Howsam, CEO of Howsam Ventures, said: “Britain’s entrepreneurs are the engine of growth, innovation and job creation – yet too often, they face barriers that stifle ambition. This research shows that reforming Capital Gains Tax isn’t about giveaways for the wealthy; it’s about unlocking the potential of founders and ensuring the UK remains a world-leading place to build businesses. By rewarding risk-takers fairly, we can stimulate productivity, attract investment, and secure a stronger, more sustainable economy for the future.

“This policy restores something vital that has been lost – the clear link between taking risks and being rewarded for success.  It ensures that entrepreneurs who build, innovate and create jobs are properly recognised for their effort and ambition.  By making those rewards tangible again, it reignites the spirit that allows businesses to grow from start-ups into major employers.  It is a true win–win – business owners are able to share more fully in the rewards of their success, while the long-term economic impact – greater growth, more jobs and higher tax revenues benefits the country as a whole.”

Comment from the Centre for Economics and Business Research: “Our modelling tells us that the Treasury could potentially benefit from an immediate cash injection if these CGT reforms were implemented and could substantially benefit over the medium to long term as a result of higher business creation and productivity. Our median impact scenario suggests that the net gain of the proposed CGT reform would be around £640 million in the first year of the initiative, rising to nearly £4 billion after five years. Even in the most pessimistic scenario – low business creation and low productivity – the net gain hovers around zero for the first years but ultimately reaches £12 billion annually after 25 years. 

“On the basis of our research, it seems an area worth exploring further from a policy perspective, as a potential lever to encourage more entrepreneurship and, potentially, greater sustained economic growth,” Sam Miley, Head of Forecasting and Thought Leadership, Cebr.

For more startup news, check out the other articles on the website, and subscribe to the magazine for free. Listen to The Cereal Entrepreneur podcast for more interviews with entrepreneurs and big-hitters in the startup ecosystem.