A private-equity chief has slammed the coalition's capital gains tax rise announced in the emergency budget last week.
Writing in the Telegraph, head of private equity at Octopus Investments Chris Allner says the rise to 28% for for those whose total taxable gains and income are above the upper limit of the income tax basic rate band "has created an imbalance between two very distinct but complementary strands of business. Ultimately this is likely to mean that the cost of capital is going to increase, which will make fundraising harder for smaller companies."
Although he acknowledged that the proposals were much less punitive than originally feared - a top rate of nearer 40% was expected - he says it's unfair on those who work for and have shares in ‘high risk’, early stage companies, for whom the prospect of a long-term appreciable capital gain is the consolation for low salaries and poor job security. Those who don't qualify for entrepreneur's relief will still be paying one of the highest capital gains rates in Europe.
