Chancellor Rishi Sunak has today announced the government will carry out a review of the UK’s burgeoning fintech sector, as part of its goal to champion Britain’s leading tech talent.
The review will explore the support the government can provide to ensure “growth and competitiveness” in the sector. Fintech has been the UK’s top performing sector in tech for several years, which contributes more than £130bn to the economy annually.
The amount poured into UK fintech startups by global investors last year almost doubled from that of 2018, attracting $48.5bn (£37.4bn) of investment — up 91 per cent from $25.4bn a year earlier.
The review will be led by Ron Kalifa, chairman of payments firm Network International and a non-executive director at the Bank of England and Transport for London.
Charlotte Crosswell, chief executive of industry body Innovate Finance, said: “We are at a crucial moment in fintech’s development. UK companies are now entering a phase of maturity that requires action to ensure that entrepreneurs can not only establish and scale their businesses in their home market, but also export their products and services internationally.”
“By better understanding the needs, requirements and key focus areas for the sector, we will put ourselves in a strong position to boost the fintech industry, and in turn support the economy as a whole.”
The City of London Corporation will act as secretariat on the strategic review.
“The strategic review of the UK fintech sector is a very positive step, and as secretariat we look forward to working with Ron Kalifa to ensure the sector continues to drive forward innovation in financial services and enhance its role as a key growth engine for the UK economy,” said the organisation’s policy chair Catherine McGuinness.
Sunak revealed the government will also host a summit to explore what further data needs to be made accessible to make it faster and easier for small businesses to shop around for credit.
Iqbal V. Gandham, managing director at investment platform Etoro, said he hopes the announcements will lead to renewed and focused regulation for overlooked parts of fintech such as digital currencies and cryptoassets.
He added: “We really hope this equals more support and investment into a vital UK sector. As a fintech pioneer in this country, we know there is so much experience, innovation and passion within the industry for the government to tap into.”
The plans came as Sunak said the government will overhaul entrepreneurs’ relief — often considered vital by many in the startup industry — but stopped short of abolishing the tax break completely.
Entrepreneurs’ relief is designed to encourage people to start their own business by granting them a reduced rate of 10 per cent capital gains tax. However, Sunak said the system, which costs the taxpayer £2bn per year, was expensive and ineffective.
As a result, the lifetime limit on claims from the relief will be reduced from £10m to £1m — a move the chancellor said would save £6bn over five years.