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Well, that’s a change of tune, isn’t it?

Arun Advani, associate professor at the University of Warwick, warned that increasing the levy could make Britain’s economy less dynamic by discouraging business owners from selling.

He said: “The vast majority of gains are coming from private business assets. The downside of raising rates is that you encourage people to either leave and liquidate or hold until death, even when they don’t really want the business anymore, to get the gains wiped out.

“By encouraging people to hold until death, even when they might want to sell, raising rates would be bad for business dynamism.”

That’s the tosser who wants the “one off” 1% wealth tax for 5 years.

6 thoughts on “Well, that’s a change of tune, isn’t it?”

  1. I genuinely never knew this, interesting. When you die and leave your business to your children, and they subsequently sell it, Capital Gains Tax is only calculated from the date of inheritance; not the date when the business was originally bought or established.

    That’s in addition to the generous business relief on Inheritance Tax exemptions.

  2. “Capital Gains Tax is only calculated from the date of inheritance”

    Yes, obviously, The Americans call this the step up basis.

    Think on it, We’re going to tax the estate at 40% (minus exemptions). So, what’s the value of the business for estate purposes? The value at founding? Or at death?

    OK, so if it’s the at death value subject to 40% then be a bit off to then charge CGT on that same decades long gain, no? That it’s been subject to IHT (minus exemptions) means it’s now valued as a fresh start….

  3. That’s exactly the situation I’m in. I’d love to sell up, but in doing the sums it shows I’ll have so little from it that I’ll have spent it all in five years. So my only option is to keep the business going until I drop dead.

    But, that means dying owning a large lump of capital. I want to be able to spend that. The whole point of building up a lump of capital over the last 30 years was to be able to spend it on trivial things like staying alive.

  4. Year’s ago I attended a State of the City address by Willie Brown, then mayor of San Francisco (Both Gavin Newsom, Gov of California, and Kamala Harris were proteges). Willie is a smart guy. Confounded FBI efforts to get him for decades. Famous for not using email because the e in email stood for evidence.

    Anyways, in response to a question about the lack of housing he observed that we’d all be surprised at the number of vacant apartment buildings in the city often owned free and clear by an old widow who was reluctant to sell them and pay the taxes but also reluctant to rent them because of all the regulations. He said that if these people could be allowed to sell without incurring so much tax it would free up a lot of vacant units. Willie made that argument a couple of decades before Mr Advani.

  5. @TD – “by an old widow who was reluctant to sell them and pay the taxes but also reluctant to rent them because of all the regulations. He said that if these people could be allowed to sell without incurring so much tax it would free up a lot of vacant units.”

    Or you could equally say that if rental was not subject to the regulations, then they could be rented.

  6. “Kamala Harris was a protégé of Willie Brown”, nice use of euphemism – she certainly ‘worked’ ‘under’ him.

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