• Several media reports suggest that U.K. Finance Minister Rachel Reeves is planning to hike capital gains tax — a levy on the profit an investor makes from the sale of their investment.
• Several entrepreneurs and investors have warned that the U.K. could face an exodus of technology entrepreneurs as a result of the reported tax changes.
• Top tech CEOs in the country argue a hike in capital gains tax would make it harder for entrepreneurs to build businesses in the U.K.

LONDON — British technology bosses and investors are warning that entrepreneurs may be forced to leave the U.K., if the government moves forward with controversial plans to raise capital gains tax on share sales.

Recent media reports have suggested Finance Minister Rachel Reeves is planning to hike capital gains tax (CGT) — which applies to the profit investors make on the sale of an investments — with The Guardian saying the levy could jump to 39%. Last week, U.K. Prime Minister Keir Starmer told Bloomberg that such speculation was "wide of the mark."

Reeves is expected to announce sweeping fiscal changes during her Oct. 30 budget, as she seeks to close a multi-billion funding gap in public finances.

The government is also planning to increase capital gains tax on shares and other assets by "several percentage points," the Times reported, meaning that those who sell their stakes in an acquisition, initial public offering or secondary share sale will be taxed on any gain in value.

Reeves also plans to cut the so-called business asset disposal relief (BADR), which allows entrepreneurs to pay a reduced 10% tax on profits from the sale of their firms, Bloomberg found.

CNBC has not been able to independently verify these reports. A Treasury spokesperson told CNBC the government doesn't comment on "speculation around tax changes outside of fiscal events." 

Several entrepreneurs and investors have warned that the U.K. could face an exodus of technology entrepreneurs as a result of the reported tax changes.

In an open letter to Reeves earlier this month, more than 500 entrepreneurs urged the finance minister to resist calls to hike capital gains tax or restrict the business asset disposal relief scheme.

"Higher CGT or any restrictions on BADR would make this relief less competitive at a time when the rest of the world is making their reliefs more competitive," read the letter, published by The Entrepreneurs Network on Oct. 13.

"It would mean the UK has the second-highest CGT rate in Europe, and jeopardise the success of our country's startup ecosystem by enormously weakening the incentive individuals have to build businesses."

The list of signatories includes the likes of Giles Andrews, co-founder of digital bank Zopa, Rishi Khosla, CEO of financing platform OakNorth, and Victor Riparbelli, boss of artificial intelligence firm Synthesia.

They suggested that the plans would make it harder for entrepreneurs to build businesses in the U.K. — or indeed, force entrepreneur out of the country.

"By discouraging entrepreneurs from starting and growing their businesses, HM Treasury could well end up lowering the tax take overall," the letter said.

"I've noticed a rising sense of stress in the U.K. tech ecosystem over proposals like this. If implemented, such a move would send a deeply negative signal," Adam French, partner at seed investors Antler, told CNBC by email.

"There is a real risk of complacency in U.K. tech, in tandem with increasing competition from Paris and Berlin for talent, and a brain drain to the U.S.," French added.

Harry Stebbings, a venture capitalist known for popular tech podcast "The Twenty Minute VC," told The Guardian newspaper last week that entrepreneurs would leave the U.K. if the government raises capital gains tax.

Calling the government's plan on capital gains tax the "biggest" issue for entrepreneurs, Stebbings said: "I know fewer entrepreneurs will be here. They will leave en masse."

Not everyone agrees that capital gains tax shouldn't be increased to raise public finances.

In a report by the center-left Institute for Public Policy Research published last week, a group of millionaire business owners said they would welcome an increase in the rate levied on capital gains to match the higher rate of income tax.

The analysis found that capital gains tax was not a primary driver of investment decisions, with entrepreneurs more focused on issues like access to financing, market opportunities and broader economic conditions.