Labour’s capital gains tax hike would deter investors

PM’s accountant warns his clients are planning to sell their businesses off in the face of Rayner’s threat

LABOUR’S capital gains tax plans will prompt a sell-off of British assets, Rishi Sunak’s accountant has warned.

Business leaders have said that proposals to hike the charge would deter investment or drive it overseas.

Angela Rayner, shadow deputy leader, last week suggested that the party should raise taxes on investments.

Mr Sunak published a tax return that revealed he earned nearly £5million in three years but paid an effective tax rate of just 22 per cent.

Ms Rayner tweeted: “Rishi Sunak’s much-delayed return reveals a Tory tax system where the PM pays a far lower tax rate than working people – who face the highest tax burden in 70 years.”

Capital gains duties are levied at 20 per cent on most assets, meaning it would have to be doubled to align it with the 40 per cent income tax rate.

Jason Hollands, director at Evelyn Partners wealth management – which produced Mr Sunak’s tax return – warned that fears over the rate being hiked could cause a sell-off of assets.

“The bigger issue will be for business owners,” he said.

“Obviously an environment with much higher capital gains tax would be very stifling to entrepreneurialism.

“Some of our clients who are business owners are thinking about whether they should exit their businesses and crystallise a sale earlier than they would have done otherwise, because they are becoming concerned about the direction of tax in the UK.”

Lord Cruddas, the Tory donor and founder of the online trading company CMC Markets, said hiking capital gains tax would “discourage longer term entrepreneurs’ investments” and “cause the UK to be less competitive”.

“We should be supporting entrepreneurs and business owners to invest and build businesses,” he said. “We should be looking to increase taper relief to encourage entrepreneurs to build businesses.”

John Longworth, the co-founder and chairman of the Independent Business Network, said that business people are making plans to limit their tax exposure in the event of a Labour government.

Mr Longworth, a former director general of the British Chambers of Commerce, said: “The idea that Labour have that they can simply tax people and therefore they’ll get the money and all the rest of it, it’s completely bonkers.

“As soon as business people see that coming they’re going to do things to avoid it… it’s not just the day before Labour is elected, it’s starting to have an effect on the economy even now.”

Labour said: “We have no plans to raise capital gains tax. Working people are facing the biggest fall in living standards on record yet the Government refuses to scrap non-dom status, put in place a proper windfall tax, or end tax breaks for private schools.”