TAX NEWS - June 2010

UK Entrepreneurs Demand Lower Capital Gains Tax To Drive Economic Recovery

Any blanket increase in CGT could have a significant long-term detrimental effect on entrepreneurial activity in the UK.

UK entrepreneurs believe George Osborne should announce an overall reduction in capital gains tax in tomorrow's emergency budget to help the UK economy recover from the deepest recession since the Second World War.

The research, from Entrepreneur Country, which held a forum for wealth creators on 16 June entitled "In a world of no money," surveyed over 500 entrepreneurs, with 59 per cent believing capital gains tax should be lowered to 10 per cent. A further 35 per cent wanted capital gains tax to stay at current levels. Less than 2 per cent believed it should be raised to 40 per cent - the current top rate of income tax - and none of the respondents wanted it to be raised to 50 per cent - the new ceiling for earned income taxation.

Julie Meyer, founder, Entrepreneur Country, says, "Entrepreneurs create wealth not just for themselves, but for their employees, shareholders, partners and suppliers. Most importantly, at a time of rising unemployment they create jobs. Clearly whilst there is a desire amongst some entrepreneurs for CGT to decrease or stay at current levels it's clear any blanket increase in CGT could have a significant long-term detrimental effect on entrepreneurial activity in the UK.

"There is absolutely no point in using the tax system to disincentivise those people, whose creation of successful businesses contributes fundamentally to the health of the UK economy," adds Meyer. "But taxation has to be fair and effective and we, do however, support many of the changes proposed, which do not impact entrepreneurialism - particularly those preventing some high net worth individuals disguising income as capital gains."