Further changes to the tax regime would deter businesses from investing in the UK and stunt economic growth, entrepreneur and HomeServe founder Sir Richard Harpin warns.
Speaking to digital editor-in-chief Kalpana Fitzpatrick on the MoneyWeek Talks podcast, which you can also watch on YouTube, Harpin said: “We’ve clearly seen people have already left the UK, and we don’t want to see more people leave.”
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“There’s got to be incentives for risk-takers to invest and work 24/7 to make a business successful here in the UK, to hopefully grow it and expand it internationally,” said Harpin.
“So we can’t have a situation where capital gains tax is the same level as income tax. There have got to be rewards for risk-takers. That’s the key to growing the UK economy.”
Following weeks of speculation, chancellor John Healey has reportedly rejected calls to raise CGT to match income tax rates, according to the Financial Timeson Tuesday.
Some argue Britain’s wealthiest should pay more tax. In July, over 100 UK-based millionaires, including broadcaster and businessman Gary Lineker and musician Brian Eno, penned an open letter to Burnham saying they would be happy to pay a wealth tax.
When asked whether billionaires should pay more tax, Harpin said, “I don’t think they should”, arguing that those billionaires had taken a lot of risk and made a lot of sacrifices in order to make their businesses successful.
“It’s a difficult job as an entrepreneur,” Harpin said. “Failure is only one step away. Those billionaires have earned their money. If they’re still in the UK, they’ve paid their capital gains tax if they’ve sold their businesses. The businesses themselves have paid a high level of corporation tax so we should not have a period of double taxation.”
“There’s got to be incentives for risk-takers to invest and work 24/7 to make a business successful here in the UK.”
Richard Harpin, former chief executive officer of HomeServe
How HomeServe went from losing £50,000 a month to being sold for £4.1 billion
Harpin knows the risks that entrepreneurs take better than most. His lifelong dream of becoming a successful businessman nearly led to his business running out of money – twice.
Harpin and his business partner began their company in 1992, with their combined life savings of £50,000.
The business venture, then called A1 Fast Fix, hit major stumbling blocks. “We literally saw our life savings go down the drain in the space of six months,” he said.
Harpin says the problems were due to the wrong business model, high costs and a lack of repeat business.
In December 1992, they had to borrow money from friends and family to keep the business going.
The following spring, they got £500,000 in investment from South Staffordshire Water for 52% of the business.
There was a “big sense of relief”, Harpin said: “I thought, right, now I can really grow the business, and it got bigger every month.”
But the company continued to haemorrhage money. “All that happened was I took £10,000 a month of losses and they became £50,000 a month of losses,” he said.
A little over a year later, the business was back in the same position. “[We’d] run out of money. [We were] literally down to our last £10,000”, Harpin said.
He continued: “Even my business partner came to me and said, ‘Richard, your life’s dream of becoming an entrepreneur…you’ve got to face it, it’s over’.”
But Harpin refused to give up. “When you’ve got a life’s dream, you’ve got to make it happen,” he said.
Luck did strike, and Harpin found out about a water company in Surrey offering annual plumbing cover.
“I went down to Surrey, stopped people in the high street and said, ‘Have you joined up? What did you like about it? What did you not like about it? And literally designed our plumbing insurance membership on the street.”
The insurance memberships took off and customer growth exploded. By 1997, HomeServe had one million customers in the UK and by 2010, five million globally.
In 2023, Harpin sold HomeServe for £4.1 billion.
How can you become a billionaire?
After selling HomeServe three years ago, Harpin is now helping other entrepreneurs grow their businesses.
In 2015, he set up Growth Partner, which provides funding and advice to medium-sized businesses to help them scale. In 2023, he acquired Business Leader, a private network where chief executives and founders of businesses worth over £3 million can receive coaching and tips on how to grow their firms.
This summer, his book ‘How to Make a Billion in 9 Steps’ was published. Harpin discussed some of those steps on the MoneyWeek Talks podcast, including why “copying” and adapting existing ideas can be a recipe for success.
“We’re taught at school that copying homework is bad. In business, it’s definitely good to copy somebody else’s idea, like I did, and then do it better and bigger and quicker,” he said.
Harpin also discussed the importance of “honing your character” and focusing on the things you’re good at – step nine from the book.
“I was only good at a very small number of things and I was really bad at lots of things,” he said.
“I used to get really miserable at my performance review with my chairman, until I realised that what I needed to do was just focus on my couple of strengths and then hire people that could do all the things that I was bad at, that I didn’t like doing, and that was the magic bullet.”
‘Why you should start a business in the UK now’
The vast majority of businesses Growth Partner works with are UK-based.
And although economic growth remains sluggish, Harpin believes it is still a good place for businesses to thrive.
“I still believe that there is no better place in the world to run a global business from,” he said. “There’s a relatively low level of red tape, and what better time to open a business or expand a business than in a difficult time?
“It will eventually get better, and if you can grow through difficult conditions, then think about how easy it’s going to be in the future.”
MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick, Andrew Van Sickle and Cris Sholto Heaton are joined by influential guests – from CEOs and entrepreneurs to economists and fund managers – to share their top tips on managing money, investing wisely and building wealth.
