Leading UK entrepreneurs have revealed they would be deterred from starting up again if Gordon Brown scraps capital gains tax relief.
The Entrepreneurs’ Organisation (EO) London asked its members, some of the most successful entrepreneurs in the UK, what they would do if this tax break, called taper relief, was abolished under Brown’s leadership.
The majority of respondents said this move would put them off starting up another business in the UK.
A third of the entrepreneurs questioned said they would consider emigrating immediately while a further third said they would think about moving abroad in the future.
Taper relief, introduced in 1998 to encourage entrepreneurs to invest, works by reducing the tax rate imposed on capital gains for a business asset. The rate that is paid reflects how long you have held that asset.
For example, if you have held a business asset for a decade, it has a 75% tax reduction on any capital gains made on it.
However, Gordon Brown is facing pressure to scrap this benefit amid claims that private equity firms are exploiting this relief.
William Berry, communications chair for EO London, commented: “Removing entrepreneur-rewarding mechanisms like taper relief may result in an exodus of talent, reducing investment in UK business, and having a considerable negative impact on the British economy.
Evan Rudowski, EO London member and founder of web design firm SubHub, added: “As I already have dual US/UK citizenship, I would not want to subject my earnings to a less preferential tax regime.
“There are already significant hurdles to entrepreneurship in the UK and it does not make sense to impose further barriers. The government should be reducing barriers to business creation and wealth creation for successful entrepreneurs.”
© Crimson Business Ltd. 2007
