UK should offer companies five-year tax break to relocate, says fund manager

The Government should introduce a five-year tax holiday for companies to encourage them to move to the UK, a top fund manager has said.

Stephen Yiu, director of the Blue Whale Growth Fund, a £1.1bn portfolio backed by City veteran Peter Hargreaves, said offering the incentive to companies interested in setting up headquarters in the UK would “change a lot” .

He said it would prevent companies with growth potential from choosing lower-tax alternatives, such as Ireland.

He added that such measures would be “cost-effective” and pose fewer risks to the Treasury’s finances than longer-term tax reduction measures.

He added: “Companies based in Ireland should take the opportunity to move to London and the rest of the UK, but they don’t because our tax regime is not that helpful.”

After leaving the EU, many expected the UK to reduce its tax rates and regulation to become a “Singapore on the Thames”: a low-tax, low-regulation, open-for-business economy that would rival the corporate sectors strongly. regulated by the European Union. .

In 2019, businessman Sir Martin Sorrell said Britain should be “Singapore on steroids”.

“The UK should be the home of Amazon, Google and Facebook, not the regulatory nightmare,” he said at the time.

Yiu added: “A temporary five-year tax holiday for companies would make a big difference and be profitable for the government.” The comments came as chancellor Rachel Reeves faced a backlash from businesses last week after unveiling £40bn worth of tax rises in her October budget, the majority of which will fall on businesses.

Reeves raised the National Insurance rate employers pay on staff salaries from 13.8 per cent to 15 per cent and reduced the threshold at which businesses start paying it from £9,100 to £5,000 a year.

The Chancellor also announced a 6.7 per cent increase in the minimum wage to £12.21 an hour for those aged 21 and over, while for those aged 18 to 20 it will rise by 16.3 per cent to £10. per hour.

Yiu said that despite his huge tax rise and Reeves’ promise to “invest, invest, invest”, his budget had not “raised the UK’s growth profile”.

“All the money has gone to places that will not stimulate the economy,” he added.

Lord Bilimoria, founder of Cobra Beer and former CBI chairman, said last week that the Budget would do “the exact opposite” of promoting growth.