Entrepreneur’s CGT Open Letter
Our joint letter (text below) from 110 Entrepreneurs on Capital Gains Tax was sent to each and every Conservative and Liberal Democrat MP, and also featured prominently in many newspaper and other media outlets, leading up to the budget.
We have reason to believe it had a significant impact in persuading the government to take a more pro-business approach to CGT in June’s emergency budget.
Whilst the new maximum rate of 28% is far from ideal, and the increase in entrepreneurial relief of little long term relevance, we believe the budget is a good result considering Liberal Democrat demands of it rising to as much as 50%.
These are links to some of the media coverage we received in the run up to the budget.
BBC News:
19/06/2010: Government warned over CGT rise
http://news.bbc.co.uk/1/hi/business/10356053.stm
Financial Times:
19/06/2010: Business Opposition
http://www.ft.com/cms/s/0/5e101cba-7b04-11df-8935-00144feabdc0.html
Telegraph:
19/06/2010: Budget 2010: 110 business leaders write to George Osborne over CGT
Express:
19/06/2010: Raising Capital Gains Tax ‘could cut the country’s income by £2.5bn a year’
Scotsman:
19/06/2010: Blanket gains tax increase ‘threatens UK’s recovery’
http://news.scotsman.com/uk/Blanket-gains-tax-increase-39threatens.6372647.jp
Guardian:
21/06/2010: George Osborne facing budget backlash
http://www.guardian.co.uk/uk/2010/jun/20/george-osborne-facing-budget-backlash
Text of Letter:
Sir,
We, the undersigned entrepreneurs, have built a wide range of new and respected businesses in a variety of sectors and are proud to have created many thousands of UK jobs and hundreds of millions of pounds of UK tax receipts.
We write this letter with respect to the changes to the Capital Gains Tax (CGT) regime expected in the UK’s forthcoming Emergency Budget.
We support many of the changes proposed, particularly those preventing unscrupulous high net worth individuals disguising income as Capital Gains.
We also understand and support the Coalition’s rationale for raising CGT on short term speculative investments, particularly those that encourage market volatility, in order to reduce the current public sector deficit. Many understandably see it as unethical that speculative investments such as spread betting which bring no material benefit to the UK economy, remain entirely tax free.
However, we believe any blanket increase in CGT could have a significant long-term detrimental effect on entrepreneurial activity in the UK.
Entrepreneurial businesses, particularly start-ups, today compete for customers, investment and talent in a global marketplace. The net effect of a unilateral CGT tax hike in the UK would drive talented executives abroad and discourage international investors from placing equity investments in the UK, resulting in reduced growth, less entrepreneurship, fewer jobs and of course, reduced tax revenues.
We would therefore urge the Chancellor to consider zero-rating CGT for all types of genuine equity investments or start-up incentive schemes, provided assets and options have been held for a significant period of time, such as twelve months or more.
Such a policy would help the UK become the natural home for innovative entrepreneurial start-ups, creating new jobs and delivering long term recurring tax revenues.
Such an approach is essential if UK business is to successfully compete on the global stage and if the UK economy is to experience solid sustainable economic growth over the coming five years and beyond.
[ENDS]
