Scale-up unit

• The Unicorn Council is very supportive of the proposed new FCA/PRA scale-up unit, which has been announced and, in respect of the PRA segment, the inaugural cohort has been selected.
• The Unicorn Council advocates for clear qualifying criteria for the unit and meaningful initial engagement for industry with the unit in 2026.

FCA Authorisations

• The Unicorn Council supports the recent changes regarding Authorisations.
• The Unicorn Council advocates for meaningful progress on VoP and new applications including the new provisional authorisation unit.

• The UK and global Payments markets are at a generational inflexion point. The National Payments Vision (Oct 24) sets out the government’s ambitions in this sector. However, the development of new regulation (eg on stablecoin, modernisation of Payments Regulation, review of SCA, and enabling agentic payments) and new infrastructure (including Bank of England work on infrastructure design and the Delivery Co)  needs to be joined-up and support innovation and competition - with effective engagement of UK FinTechs to ensure these initiatives build a future focused payments industry that can scale globally from the UK; proportionate pro-innovation regulations; and agile infrastructure with enhanced data sharing capability, lower costs, and interoperability.
• If the UK gets this right, the opportunity is significant. The flipside could see oversees payment solutions coming to dominate the UK market.

• Challenger banks lead innovation and growth in banking, lending and payments services to SMEs.
• The Unicorn Council advocates for bank capital rules that reflect positively the differentiation between large banks and Challenger banks and which will enable faster innovation, greater competition and higher growth.

• SMEs drive a large part of UK growth:  providing access to funding for SMEs is a crucial part of that process of growth creation.
• The Unicorn Council advocates for greater financial capacity for the British Business Bank’s programmes and optimized bank capital rules to maximise growth in SME lending.

• Youth unemployment (16-24 year olds) has reached historically high levels, and FinTech can play its part to combat this. The Unicorn Council advocates for incentives for employers to increase hiring and training in the category.
• Existing visa programmes for attracting experienced overseas talent must be retained, with allocations expanding with Firm growth.

Direct taxes on entrepreneurs and staff

BADR: re-incentivise entrepreneurs to start businesses in the UK

• Increase cap to £20m (this was reduced from £10m in 2020, the level of the previous 10 years)
• Extend BADR to CSOP options
• Don’t increase CGT rates on BADR further

The Unicorn Council is very supportive of the changes made over the last 5 years to the UK Listing Rules to make the London Stock Exchange more competitive internationally. The Unicorn Council also welcomes the capital initiatives of the Mansion House compact, to mobilise UK pension fund capital, and PISCES, to help high growth private companies to trade their shares. Additional policy proposals that we recommend are:

• Expand the IPO “welcome package” to include a 3-year 10% CGT rate on staff share sales under BADR
• Abolish stamp duty in line with US and other markets
• Implement initiatives to ensure DC pension fund money under the Mansion House Accord finds its way to private and listed UK equities and not just to infrastructure and other fixed income asset classes
• Allocate £250m for BBB to crowd-in investment into AIM/Aquis funds

• EIS:
  a) Many FinTechs are at a disadvantage versus other sectors because they are excluded for EIS and EMI: we recommend to allow lending, banking and insurance to be permitted activities for both EIS and EMI.
  b) The 7-year time limit for raising EIS capital from first date of trading is no longer appropriate for the profile of today’s scaling companies, and disproportionately impacts female founders. We recommend removing the 7 year limit.
• EMI: Good that the limits have been increased to accommodate scale-ups, but now EMI needs to be updated for High Growth companies:
  a) Increase the 500-employee limit to 1,000
  b) Increase the gross asset limit from £120m to £500m
• CSOP: this scheme is unattractive versus EMI, however many FinTechs cannot use EMI due to the restrictions in EMI rules (see above). We propose
  a) Increase individual employee limit from £60k to £250k (consistent with EMI)
  b) Reduce minimum hold period from 3 years to 1 year
  c) Allow CSOP shares to qualify for BADR (consistent with EMI)
  d) Allow options to be granted below market value (eg nominal value, consistent with EMI)

• IHT: amend scope of IHT so that worldwide assets are not in scope
• CGT: do not introduce an exit tax for departing individuals and be clear about this in order to avoid future uncertainty

FinTechs have largely been excluded. R&D is reducing and/or moving off-shore

• ensure the rules allow FinTechs to qualify for credits
• amend the advance assurance proposals to be more helpful

• Many FinTechs are at a 20% cost disadvantage versus other sectors due to being VAT-exempt. This means they must raise 20% more capital ceteris paribus: give early-stage VAT-exempt FinTechs a VAT rebate for the first 5 years