• Stuart Fowler

A lot of nonsense about CGT

Britain’s small business champions (and tax advisers) are indignant at the Chancellor’s failure to consult (a novel concept, that one) on changes to the taxation of gains on business assets. They are predicting that entrepreneurs will not back or start new businesses, or go and do it somewhere else, and that investors will keep their hands in their pockets. If a Government offers to share an investor’s risks, some will take risks they would not otherwise. VCTs and EIS (and their predecessors like BES and EZTs) testify to this, though not obviously to investors’ great advantage. Indeed the Government has sensibly been tightening up the tax-break qualifications for EIS and VCT schemes to ensure only the high risks of genuine entrepreneurship are incentivised (although AIM-related reliefs, now largely restricted after these CGT changes to dubious IHT advantages, remain an anomoly).

Business property held for just two years has been taxed at 10%, but only since 2002. From 2000 to 2002, the holding period had been four years, and before that 10. It is entirely speculative whether 10% instead of 20% made a real difference to entrepreneurship or that 18% instead of 10% will now.



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