Capital gains tax rumours ahead of Budget show Labour doesn't understand entrepreneurs: Bird Lovegod
Waiting generally isn’t fun although it depends what you’re waiting for. Christmas morning, maybe, if you’re a child. Scan results? Less fun. Autumn budget from our new and inexperienced Government? Also not fun.
There’s a lot of agitation around it, especially from the startup and business community, if there is such a thing, especially regarding capital gains tax.
Did someone mention 39 per cent? Who? And if so, why? One theory is that this kind of amateurish so far Government is testing the waters, chucking out by way of leakage numbers and seeing how people react.
If so, they’re pretty dumb, because uncertainty is the least favourable condition for businesses.
They may also have leaked a high number so the real, lower number, when revealed, will be seen as a less painful than expected blessing.
Again, if this is their ‘strategy’, they should stop insulting the intelligence of the people and just be honest.
Why politicians feel they have to be sneaky and can’t just be straight is a mystery we have many more moons to explore.
Currently capital gains tax on business shares sold is 10 per cent for basic rate taxpayers and 20 per cent for those capital gains exceeding the higher rate threshold.
Entrepreneurs are happy with this, and in the unlikely event they manage to create a valuable commercial entity by risking their own capital and labour, and probably other peoples as well, they deserve, in their opinion, a low tax rate because of the high risk involved in getting to that position.
After all, if they fail, the Government isn’t going to refund them the money they lost.
The upset currently being felt, other than the rumors providing no concrete to build on, is the our naive Government is cosying up to big business, with its billions of ‘promised money’ and reality of ‘subsidies for jobs’, and in doing so is going to ignore the actual real businesses, including the unborn ones, that make up the majority of employers and innovative and creative culture.
I don’t think our Government is very creative.
Sir Keir comes across as a bit of a suit, a law man, a man of principles, a solid manager. But a creative thinker? I’m not feeling it.
There’s a lot of questions about whether he understands business, and how to create the fertile ground for businesses to grow in. The best soil for businesses is that with minimal government bull manure mixed into it.
As fertiliser, the SEIS and EIS tax relief for angel investors is a vital and highly effective incentive to invest.
In a nutshell, investments made under the SEIS scheme, up to £150,000, pay little or no tax when realised as profits, and if the investment fails, almost half the loss can be offset against other tax liabilities. If Labour messes with SEIS, you know they have no idea what they’re doing.
For businesses to flourish they tend to need easy access to funding, which means tax incentives for investors, and they also need low capital gains tax when they are sold, again, to benefit investors as well as the founders. If investors are incentivised at both ends of the investment, that’s good fertile ground.
If the Government takes away one or both of these incentives, that’s going to have an immediate and highly detrimental effect on startups. Add into that the burdensome employment rights being introduced, and suddenly the entire sector has had the fuel line cut and the payload increased.
Does our Government understand this? I do not know. It remains to be seen. On Halloween. I’ll be waiting, plastic spider in hand. Trick or treat?