Britain faces warnings of a tech exodus over tax plans ahead of high-stakes budget

LONDON — British technology bosses and investors are warning that entrepreneurs may be forced to leave the U.K., if the government moves forward with controversial plans to raise capital gains tax on share sales.

Recent media reports have suggested Finance Minister Rachel Reeves is planning to hike capital gains tax (CGT) — which applies to the profit investors make on the sale of an investments — with The Guardian saying the levy could jump to 39%. Last week, U.K. Prime Minister Keir Starmer told Bloomberg that such speculation was "wide of the mark."

Reeves is expected to announce sweeping fiscal changes during her Oct. 30 budget, as she seeks to close a multi-billion funding gap in public finances.

The government is also planning to increase capital gains tax on shares and other assets by "several percentage points," the Times reported, meaning that those who sell their stakes in an acquisition, initial public offering or secondary share sale will be taxed on any gain in value.

Reeves also plans to cut the so-called business asset disposal relief (BADR), which allows entrepreneurs to pay a reduced 10% tax on profits from the sale of their firms, Bloomberg found.

CNBC has not been able to independently verify these reports. A Treasury spokesperson told CNBC the government doesn't comment on "speculation around tax changes outside of fiscal events." 

Several entrepreneurs and investors have warned that the U.K. could face an exodus of technology entrepreneurs as a result of the reported tax changes.

In an open letter to Reeves earlier this month, more than 500 entrepreneurs urged the finance minister to resist calls to hike capital gains tax or restrict the business asset disposal relief scheme.

"Higher CGT or any restrictions