Albert Ellis is Chief Executive Office of Harvey Nash, the global professional recruitment and IT Outsourcing consultancy.

The Chancellor, CGT and the fallout.......

The Chancellor, CGT and the fallout from the Private Equity debacle

I agree wholeheartedly with Sir George Cox’s article in The Times today.

"As someone who has campaigned in various guises for a more enterprising business climate in the UK, he was both surprised and dismayed at the Chancellor’s announcement of his intention to abolish a tapered approach to capital gains tax on business assets. It is the opposite of what is needed. To stimulate economic growth, we need to encourage enterprise. That means encouraging entrepreneurs to start businesses and encouraging established businesses to pursue long-term growth strategies."

I blogged about this on this on 4 June 2007 in relation to the debate about private equity paying less tax than their cleaners.

"My fear is that the Treasury, under huge political and media pressure, buckles completely and tries to crack a nut with a sledgehammer by putting in danger all the good schemes and capital relief available to everybody, not just private equity. Especially the valuable employees of Harvey Nash, who can invest their own money in the company they work for and, after a number of years, are able to enjoy capital gains tax relief, but only when they sell their shares. That’s a valuable motivational and retention tool in my talent management programme and I would be very sad to see it go."

I feel, like Sir George Cox, sad that the current government is so predictable that we were able to forecast the impact so precisely.

So, to be clear, the loyal employees of Harvey Nash, none of whom can retire on their gains even at 0% tax, most of whom have held on to their investment in Harvey Nash for between 3-5 years, will now see 80% more tax to pay on their gains - as a reward for taking the long term view and holding onto their shares.

October 15, 2007 02:23 PM | Permalink