Entrepreneurs expect CGT rise

MOST business people quizzed by the adviser Clearwater Corporate Finance believe the Government will increase capital gains tax next year.

Some 87% of respondents to Clearwater’s survey said an increase would cause them to think differently about their retirement or exit plans.

Nearly all of those surveyed also thought the new 50% top rate of income tax will fail to raise the expected revenue.

And 89% of those questioned believed the rise will be counterproductive by encouraging the use of tax avoidance schemes or discouraging inward investment.

Clearwater partner Mike Reeves said: “The new top rate is the highest level of income tax since the 1980s. Entrepreneurs and their advisers clearly feel that the tax rise will fail to achieve the desired results and the government will have to look for more tax rises.

“Once the new rate comes into force, entrepreneurs are likely to become disillusioned. Those who are planning to exit in the near future may well decide to sell up there and then rather than wait for the market to recover and risk being hit by a further rise in capital gains tax.”