Commenting on the publication today (Friday 26 February) of the long-awaited Kalifa Review into the UK’s fintech sector, Tom Shave, Partner and Head of Fintechs, said:
“We commend the review for its bold ambitions to position the UK as the leading market for fintech businesses. However, there remains a risk that the government opts not to take the hard decisions in pushing through Mr Kalifa’s recommendations, leaving the market to fend for itself once again in a very competitive global market.
Fintech is a critical sector for domestic investment, particularly given its development in the last 18 months despite the headwinds of COVID and Brexit, and the UK already has a considerable head-start with some great HQ unicorns. Nevertheless, much more must be done to translate large, privately-backed firms into global, multinational listed businesses. Too often in the past fast-rising UK tech companies have sold out early in their journey and not emulated their more successful US peers.
In that context, while many of the recommendations in today’s review are welcome, the real litmus test will be how many are actually implemented in practice and the extent to which wider UK government policy decisions are coordinated to maximise impact. For example, not targeting entrepreneurs tax reliefs in the upcoming budget and seeking equivalence for financial services with the EU would be a missed opportunity. What’s more, although changing the listing rules to support UK fintech listings would be a great move, there is still considerable uncertainty as to whether the LSE would do this.
We are very pleased to see the review recommend expanding the R&D tax credit regime, given this has been a critical factor in the growth of the UK fintech market. However, we urge Government to consider these findings properly and be bold in adopting them so we can compete with the US as the go-to jurisdictions for Fintechs.”
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.