10% CGT rate.

CKhalvashi

InvesterJones said:

CKhalvashi said:

The simple fact though is that if CGT is at income tax rates, many will simply take the money annually instead of reinvesting into businesses whether that is here or abroad.

The current system compensates for risk.

I'm not sure that's a fact. Nor do I think it's up to the tax system to be the compensator for risk - price (and therefore return) should do that already.

I'd argue that the tax system doesn't take the risk.

It's pretty reasonable to wage that the tax system is better off overall with the risk being taken.

I'd earn a lot less doing what I did before, without the jobs created being in the system. If you bring small family-run businesses into the income tax system on disposal, as highlighted on the previous page, many simply won't bother.

I'm sitting on assets in Ltd companies, I can't take the money out (as those assets are needed for the running of the business amd are not held in cash) and as I've owned the company since it was started (with shares valued at £100 for which £100 was paid) everything but the £100 would be taxable on sale. That puts me from an effective tax rate starting at 10% to 45% on significant sums.

We would also likely sit on rented assets, which in our case has a significant environmental risk.

The companies pay VAT and corporation tax for annual funding towards the state, the employees of those companies pay tax and NI, reducing dependence on the welfare system. Almost all of my suppliers employ people in their communities.

Capital gains are still not traditional income, any retained profits are required for the company to function and cannot physically be extracted before sale without placing the tax revenues in the previous paragraph in jeopardy.

Once again, harming small business (I'm not referring to myself, I'm referring to small, family owned businesses in our local communities who would be brought in to what is being suggested) is not going to yield the results you want.

John464

InvesterJones said:

CKhalvashi said:

The simple fact though is that if CGT is at income tax rates, many will simply take the money annually instead of reinvesting into businesses whether that is here or abroad.

The current system compensates for risk.

I'm not sure that's a fact. Nor do I think it's up to the tax system to be the compensator for risk - price (and therefore return) should do that already.

But the return will be less if its taxed
Less incentive to invest = less growth
(except in the world of pre-election promises where we can raise Capital Gains Tax and growth will magically appear)

As I understand it, one of the reason dividends were taxed less than income is that wages are taken out of the company before corporation tax is paid
But dividends are paid out of profits that have already been taxed
So taxing dividends is double taxation

InvesterJones

John464 said:

InvesterJones said:

CKhalvashi said:

The simple fact though is that if CGT is at income tax rates, many will simply take the money annually instead of reinvesting into businesses whether that is here or abroad.

The current system compensates for risk.

I'm not sure that's a fact. Nor do I think it's up to the tax system to be the compensator for risk - price (and therefore return) should do that already.

But the return will be less if its taxed
Less incentive to invest = less growth
(except in the world of pre-election promises where we can raise Capital Gains Tax and growth will magically appear)

And if the return is less, the price will rebalance in accordance with the proportion of trades affected. No need for tax or lack of to be used as a risk incentive - the market already thinks the UK is cheap for the return.

John464

InvesterJones said:

John464 said:

InvesterJones said:

CKhalvashi said:

The simple fact though is that if CGT is at income tax rates, many will simply take the money annually instead of reinvesting into businesses whether that is here or abroad.

The current system compensates for risk.

I'm not sure that's a fact. Nor do I think it's up to the tax system to be the compensator for risk - price (and therefore return) should do that already.

But the return will be less if its taxed
Less incentive to invest = less growth
(except in the world of pre-election promises where we can raise Capital Gains Tax and growth will magically appear)

And if the return is less, the price will rebalance in accordance with the proportion of trades affected. No need for tax or lack of to be used as a risk incentive - the market already thinks the UK is cheap for the return.

Not much use bidding up the shares of existing businesses.

For growth we need to start new businesses.
Which cost the same to set up whatever the rate of CGT
But if the rate of CGT is higher it leaves less incentive to take the risk

Worst of all when there is uncertainty, like populist calls to bring in windfall taxes on a whim.
Because investment decisions to build and expand businesses have to be planned years in advance
Why would you invest in the hope of big returns if the Government is going to move the goalposts and clobber you with a new tax when you do?

masonic

"Windfall" is normally used to refer to something sudden and unexpected, not something that is part of a growth strategy or business plan. A topical example would be the windfall enjoyed by energy producers in the wake of the invasion of Ukraine. ISTR the CEO of one such company being quite welcoming of such a tax being levied.