Private equity and venture capital sectors seek insights from UK's Rachel Reeves on their demands and expectations
The British Private Equity and Venture Capital Association (BVCA) has called for several tax and investment reforms to drive growth and enhance the UK's competitiveness, particularly in the private equity and venture capital sectors. These proposals aim to counteract pressures on investors caused by recent taxation and fiscal policy changes.
The key suggested reforms and strategies include:
- Reforming taxation to incentivize equity investment: Proposals involve reducing or eliminating stamp duty on shares and adjusting pension rules to better support equity investment. This aims to improve liquidity and competitiveness in the public markets, indirectly benefiting private markets as well.
- Enhancing support for venture capital investments: Reforms to make it easier for defined contribution pension schemes and local government pension schemes to invest in venture capital and a broader range of asset classes are being proposed. This aims to increase the capital flow into startup enterprises and innovative ventures.
- Reducing regulatory burdens under the Leeds Reforms: Introduced in July 2025, the Leeds Reforms focus on targeted deregulation to reduce compliance costs and risk-related regulations for private fund managers. This includes changes in the Alternative Investment Fund Managers (AIFM) regime and broader financial services regulation reform.
- Launching new platforms like PISCES: The Private Intermittent Securities Capital Exchange System (PISCES) is a new stock exchange for private company shares aimed at improving liquidity and investor access to private equity, supporting growth in the private markets.
These reforms are designed to counteract perceived investor pressure stemming from recent tax and fiscal policy changes by making equity investments more tax-efficient and accessible, encouraging pension and institutional investors to allocate more capital toward private equity and venture funds, streamlining compliance, and reducing regulatory costs. They aim to boost growth while maintaining the UK’s competitiveness in private equity and venture capital globally by fostering a more investor-friendly environment and facilitating capital flow into innovative businesses.
As the UK government continues to drive forward reforms to pensions and wider capital markets, it is crucial that they make their rejection of a potential asset tax explicit to ensure the country remains open for business. A renewed focus on pragmatic and pro-growth measures is urged as Budget speculation arises. The Chancellor, Rachel Reeves, has shown commitment to delivering growth through investment.
However, the changes to taxation of carried interest, while more pragmatic than expected, are still concerning for investors. The government must be mindful of the burden placed on working people's incomes. Raising thresholds, particularly for knowledge intensive companies, and merging existing R&D tax relief schemes into a unified system with higher rates for R&D-intensive SMEs would support Government priorities.
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 UK's ability to attract private equity and venture capital investment is crucial for its growth and competitiveness. As such, maintaining an investor-friendly environment is essential.
Sources:
[1] British Private Equity and Venture Capital Association. (n.d.). Retrieved from https://www.bvca.co.uk/
[2] HM Treasury. (2025). Budget 2025: Building a Stronger Economy. Retrieved from https://www.gov.uk/government/publications/budget-2025-documents/budget-2025-documents
[3] Financial Conduct Authority. (2025). Leeds Reforms: AIFMD and MiFID II. Retrieved from https://www.fca.org.uk/news/press-releases/leeds-reforms-aifmd-mifid-ii
[4] The Pension Regulator. (2025). Pension Schemes Bill: Overview. Retrieved from https://www.thepensionsregulator.gov.uk/en/about-tpr/what-we-do/legislation-and-policy/pension-schemes-bill-overview
- The British Private Equity and Venture Capital Association (BVCA) suggests reforming taxation to make equity investments more tax-efficient and accessible, which could attract more capital from pension and institutional investors into private equity and venture funds.
- Reducing regulatory burdens under the Leeds Reforms is proposed to create a more investor-friendly environment, with the goal of attracting private equity and venture capital investment and fostering growth in the private markets.
- The BVCA advocates for launching new platforms like PISCES, a stock exchange for private company shares, to improve liquidity and investor access to private equity, thereby supporting growth in the private markets.
These reforms aim to boost the UK's competitiveness in private equity and venture capital globally, counteract pressures on investors, and facilitate capital flow into innovative businesses.
