Elimination of taper relief a threat to entrepreneurship

Hamish Mair, manager of the F&C Private Equity Trust, said although the single CGT rate was a welcome move for investors in publicly quoted companies, the elimination of taper relief threatened the future of entrepreneurship in the UK.

"This was a populist move targeting the management of private equity firms who have been accused of paying unfair levels of tax but it will mean that any entrepreneur who previously was willing to take a risk by investing in any private company, be it backed by private or venture capital or indeed any private small or medium sized company, might now think twice before investing.

"When you consider that the CGT tax in France is 16%, in Italy 12.5% and in the US 15%, not to mention Switzerland which has no CGT, the competitiveness of the UK's tax system for business has been significantly reduced and the UK's position as a world leader of enterprise and innovation is now under threat. Nonetheless, the private equity sector at least, has proven itself resourceful and resilient to previous state intervention in free enterprise both in the UK and elsewhere in the world and we expect the industry to continue to deliver robust returns, despite, rather than because of, the politically motivated actions of government," said Mair.