Brewdog founder attacks Reeves’s capital gains tax raid ahead of £1.8bn stock market float
The founder of BrewDog has lashed out at plans by Sir Keir Starmer and Rachel Reeves to raise capital gains tax, ahead of an expected stock market listing that would put him in line for a major windfall.
James Watt said a large rise in capital gains tax in the Budget on Oct 30 “will destroy entrepreneurial spirit in the UK and in turn severely damage our economy”.
In a post on LinkedIn, he wrote: “Most of the brilliant business minds that I know, the people who drive our economic growth and create our jobs, will simply leave the UK to build businesses and create jobs elsewhere.
“If we lose our brightest and best entrepreneurs, which we undoubtedly will if we significantly increase capital gains tax, we deal a hammer blow to the UK economy and the overall prosperity of every single UK family.
“Increasing capital gains tax will do far more damage to our economy than any gains we may experience from increasing this tax.”
His comments come as BrewDog considers a stock market float, which Mr Watt previously claimed could value the company at as much as £1.8bn. No formal IPO process is yet under way and other options including a private equity sale are also being considered.
Mr Watt co-founded BrewDog with fellow entrepreneur Martin Dickie 17 years ago, but stepped down as chief executive earlier this year, following a string of controversies including allegations that he presided over a “toxic” culture at the company. He handed the reins to former Boots Opticians boss James Arrow.
Mr Watt remains a significant shareholder in the company with 21pc of its equity. If BrewDog did achieve a £1.8bn IPO, he would be in line for a windfall of more than £370m before tax.
Shares sales would be liable to capital gains tax. Higher earners currently pay a 20pc rate on profits from the sale of assets such as company stock.
Reports have suggested that Ms Reeves could raise capital gains tax to as high as 39pc, as she seeks to plug an alleged £22bn “black hole” left in the nation’s finances by the last Conservative government.
Sir Keir has said talk of a 39pc rate was “wide of the mark” but Ms Reeves has stoked speculation that the rate will be increased by saying this week that “those with the broadest shoulders will be bearing the largest burden”.
Asked if an increase in capital gains would put him off investing in the UK or persuade him to leave the UK altogether, Mr Watt told The Telegraph: “At the moment, I would say that all options are on the table.
“I’ve got no plans in the short term, and I want to stay in the UK. The UK is my home. I want to continue to create jobs and build new things in the UK, because it’s where I’m from, and I’m passionate about the UK, but the Government has got to understand that.
“They’ve got to make it attractive and not cumbersome and appealing for people who want to put everything on the line, to sacrifice everything, to build businesses here.”
He added: “Some of the people that I’ve spoken to about leaving, it’s a combination of US, Middle East and other places. I think we’re going to see a lot of amazing minds, amazing job creators, amazing business people leave the UK over the next few years.”
Despite criticising the Labour Government’s plans to raise capital gains tax, Mr Watt argued: “After 14 years of the Conservative Party government, our beloved country has never been in a worse state.”
The businessman has previously hosted Sir Keir at BrewDog’s bars when Labour were in opposition, with the future Prime Minister posing for pictures holding pints of BrewDog beer. Mr Watt has described Brexit as an “unmitigated disaster” for the UK.
Mr Watt’s exact politics remain unclear. He was also pictured attending Nigel Farage’s birthday party this year. He is in a relationship with Georgia Toffolo, the former Made in Chelsea star who is reported to have been a Conservative member for most of her life and is a close friend of the Reform UK leader.
Asked about his political allegiances, Mr Watt said: “As to where I sit. I would say probably it’s pretty much, disillusioned, nowhere, as opposed to on one side of the fence.”
In a statement following the event, which was also attended by former prime minister Liz Truss, Mr Watt said he was “always happy to meet with people with a wide diversity of views and happy to meet with people from all across the political spectrum”.
In his Linkedin post, Mr Watt also warned the Chancellor against re-classifying some national debt in order to create headroom for further borrowing to fund the Government’s economic plans.
He wrote: “This recategorisation proposal is governmental equivalent of a smart six-year-old putting the family clock in the kitchen back an hour to postpone bedtime.
“A neat sleight of hand, but the whole family know that they will pay the price for having a tired and grumpy child in the house the next day. It is almost incomprehensible that anyone could think that the solution the UK needs is to make a technical change to how our debt is calculated to allow us to borrow more.”
Mr Watt has launched a new company called Social Tip since stepping back as the boss of BrewDog. The company will allow regular social media users to be paid for posts about brands.
An HM Treasury spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”