From The Guardian:
The former head of HM Revenue and Customs has called on the government to scrap a controversial tax break designed to help entrepreneurs, which he said was costing the country £2bn a year in lost tax yet provided “no incentive for real entrepreneurship”.
Sir Edward Troup, who was executive chair of HMRC from 2016 until January 2018, said whichever party won the general election on 12 December should abolish the “entrepreneurs’ relief” applied to capital gains tax (CGT).
Troup’s intervention on Wednesday came in response to a Guardian report on Tuesday showing thousands of the country’s richest people were exploiting the policy to pay as little as 10% tax on billions of pounds’ worth of capital gains...
Troup, who is now a consultant at McKinsey, said there was a “very strong case for [whichever party won the election] to ramp down entrepreneurs’ relief immediately”.
Whatever your view, gut instinct tells me that if people build up a business from scratch and sell it, such gains ought to be taxed at a lower rate (aka Entrepreneur's Relief) than straight investment gains, which of necessity mainly accrue to the already wealthy. We can argue about the finer details later on (the £10 million limit for Entrepreneur's Relief seems excessively high to me, why not go back to retirement relief and just exempt the first £1 million or so and tax the rest at full rates?).
For some reason, this ex-HMRC head is homing in on Entrepreneur's Relief while missing the obvious targets.
1. Investor's Relief, which is a 10% CGT rate for people who in subscribe for new shares in the right kind of company, and
2. SEIS, EIS and VCT reliefs, which include a 0% CGT rate on shares (among many other goodies).
It's those two items which are designed to - and do - benefit the already wealthy, not Entrepreneur's Relief.
How the heck he ended up running HMRC is a mystery to me, he'd have failed the most basic tax exam. And presumably McKinsey took him on for his other marketable skills. Maybe he knows how to unblock paper jams in printers or something?
Debate Magazine
