Big Six experts knock Labour plans on CGT
Labour’s plans for a two-tier capital gains tax need rethinking, experts claim.
Designed to combat short-termism displayed by institutional investors, the party’s proposed CGT regime would introduce lower tax rates for assets held longer than a set period.
But Ernst & Young tax partner Patrick Stevens warned the plans could hinder entrepreneurial growth. ‘CGT, as it stands at 40%, is a disincentive for growing businesses,’ Stevens said. ‘Labour are proposing we look to long-term capital gains. But then if someone is very successful building up their business quickly they will be penalised when they look to profit from it, whereas someone who builds a company slowly will benefit.’
Price Waterhouse’s head of indirect tax John Whiting argued that CGT needs greater simplification. ‘I quite like the short-term/long-term idea,’ he said ‘because it might simplify the system, but encouraging long-term investment is a much bigger subject than just making adjustments to CGT’.