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Chancellor to reverse ‘short-sighted’ angel investor policy

Chancellor angel investors
Image credit: Fred Duval / Shutterstock

The chancellor is set to reverse the increased wealth threshold for angel investors following widespread industry backlash.

At the end of January, the Treasury implemented changes to financial promotion rules that raised the required income threshold to qualify as a high-net-worth angel investor from £100,000 to £170,000.

The change was met with outcry from the tech and investment community, which warned that the change would result in less funding for startups and disproportionately exclude women and underrepresented groups from investing opportunities.

The intense lobbying from groups like the Startup Coalition and industry campaign InvestHER prompted the Treasury to consult with the tech and investment community.

While there was not enough time to stop the policy change before it took effect, the chancellor is now expected to announce it will be reversed in the Spring Budget on Wednesday.

The reversal, first reported by The Telegraph, has been universally welcomed by campaigners.

Sarah King, CEO of women-centric investment platform Obu, said the backtrack of the “short-sighted” policy “showcased the power of collective action”.

“We’ve demonstrated that when policy and legislation don’t meet our ambition and conviction for equality and equity in entrepreneurship and investment that we are able to galvanise voices and champion change,” said King, who was part of the InvestHER campign.

Startup Coalition executive director Dom Hallas said he was “very pleased” about the plans, though he noted he has “learned not to count our policy chickens until we formally hear them from the chancellor on budget day”.

Emma Wright, a partner at law firm Harbottle and Lewis and driving force behind the call for protecting women investors, said she is waiting “with anticipation for the chancellor’s expected announcement”.

Wright told UKTN: “InvestHER has always been about giving a voice to the underrepresented groups in the tech and finance ecosystems and I’m honoured to be entrusted with co-ordinating that voice.”

The changes to angel investor rules were aimed at updating the threshold to be in line with inflation and protect a new wave of investors amid a rise in investor platforms. However, the saga has raised questions over how the unintended consequences of that policy were missed during the consultation phase.

“Going forward it’s vital to have women at the table – at every table, every step of the way – to ensure laws like this do not get created in the first place,” said Hailey Eustace, an angel investor and founder of deep tech communications firm Commplicated.

King added: “The disproportionate impact on women, people of colour and those outside of London hadn’t been given enough voice in the decision-making process.”

UKTN has contacted the Treasury for comment.