A rise in capital gains tax (CGT) will dramatically affect Brtain’s entrepreneurial spirit, the Institute of Directors (IoD) has warned the Government this week.
Afford Bond Chartered Accountants Director, Paul Edwards said: “If the Government decides to act on recommendations from a recent report by the Office for Tax Simplification, capital gains tax rates could be increased – as many people have speculated – to help cover the costs of the COVID-19 pandemic. There is a preconceived idea that it is easy to be an entrepreneur but the individual costs can be many and are hard won.”
IoD chief economist Tej Parikh said this approach would be “flawed”, and would discourage people from starting businesses or taking on risk.
With the Brexit transition period approaching, Parikh also argued that hiking CGT right now could add to the “impression held by some that wealth creation is falling down our list of priorities”, and urged the Government to consider the UK’s international reputation as a destination for business.
Any CGT reform would have to be done with extreme care to prevent a knock-on effect. And positive entrepreneurialism will be more important than ever in the months ahead. Most commentators believe that ramping up CGT will pour cold water over Britain’s entrepreneurialism just when we need it most. “It’s not an answer to the costs of coronavirus,” said the IOD, “but rather paves the way for a stunted recovery.”
If you need expert tax advice or guidance, please contact Nantwich Accountants on 01270 623731 or Wilmslow Accountants on 01625 416380.