A firm gives a bullish view about the level of interest that overseas buyers have in UK equities, but the tone darkened when this publication asked about the impact of possible capital gains tax hikes.

The CEO and founder of a “next-gen” stock exchange, market platform and fintech business says the UK could witness a “tidal wave” of inward investment because domestic equities are cheap and it appears that the country has a stable government with a big majority.

The comments came from Alasdair Haynes of Aquis Exchange, a business regulated in the UK and France. 

"At this point in time, I'm extremely bullish about what's going to happen in the UK and what's going to happen in Europe. The UK in particular, I think, has been a very, very cheap market and it hasn't been invested in because it hasn't had a stable government for a number of years,” Haynes said. “Regardless of how you voted in the last general election, now it looks like we actually have a stable government with a significant majority.”

“I think that is going to open the doors for literally a tidal wave of international investment to be able to come into the UK. The capital will arrive not only domestically, which it has been in the past few years, but actually internationally and particularly from the US,” he said. 

But already, there are questions over whether the new Chancellor of the Exchequer, Rachel Reeves, might push up capital gains taxes in her 30 October budget statement. For higher rate taxpayers, CGT is either 20 or 24 per cent. 

WealthBriefing asked Haynes, after his comments had been released via a podcast, if he feared that a CGT hike could quickly dent the UK’s investment attractions.

“Any increase to capital gains tax would be the death of entrepreneurship in the UK. New founders will have no incentive to put their time, expertise and capital into starting and growing a business here,” he said. “Not only would that be to the detriment of our vibrant ecosystem of founders and business leaders, but ultimately an own goal for the government who would be missing out on the PAYE and corporation tax that these businesses would otherwise have contributed as they grew and scaled.”

In his podcast, Haynes spoke of the need to get retail and other investors back into the UK stock market, responding to concerns about a drop-off in equity participation in recent years. (Aviva has spoken to this news service about the problem of declining retail and other holdings of listed equities.)

“We need to get the public back into public markets…The appetite and interest in equity [in the US] is huge, and we don't have that here,” Haynes said.