QCA pushes for capital gains tax reform

10th February 2012

The Quoted Companies Alliance has published its proposals for the upcoming Budget in March, which focus on reforming capital gains tax and encouraging long-term investment.

We believe that everyone that makes a meaningful contribution to the long-term growth and success of a business should qualify for Entrepreneurs’ Relief, which reduces the capital gains tax rate from 28% to 10%. To achieve this, we have proposed that the Government scrap the requirement to hold 5% of share capital to qualify for Entrepreneurs' Relief. To fund this relief extension and ensure it promotes long-term investment, we have suggested that the period that shares have to be held before qualifying for relief should be extended from one to three years.

We also suggest rebranding Entrepreneurs’ Relief as ‘Stakeholders’ Relief’ through extending Entrepreneurs’ Relief to long-term investors in SMEs and introducing a holding period of five years for them so that businesses can attract and reward long-term investors’ support.

Our other proposals include:

• Reinstating the dividend tax credit for pension funds to encourage long-term investment and funding for growth
• Including AIM and PLUS-quoted shares in ISAs to encourage long-term investment and liquidity
• Simplifying tax rules to encourage economic growth
• Abolishing stamp duty to increase investment and liquidity in the sector
• Tax relief for the costs of raising equity to create a level playing field for equity and debt

You can read our detailed proposals by clicking here.

As ever, if you have any comments about any of these, difficulties that you want us to raise with HMRC or HM Treasury, let us know by emailing Kate Jalbert.

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