Bel is thinking

An extract from a comment, which I thought merited wider publicity, on my post about taper relief:

I have owned my business for over 25 years and if I wished to sell now my capital gains tax, allowing for indexation and taper relief, would work out at £59,000 - if I do not sell until after the 6th of April next year my capital gains tax payable will increase to £144,000.

So after all these years of working at my business and just before wanting to retire this government robs me of over £80,000 from my retirement fund. This is robbery - our tax planning strategy has just been ripped to shreds.

Also many people here in the west country who own hotels and similar small businesses are likely to see a stampede of people trying to sell their businesses before the 5th of April 2008 - this is not a healthy situation.

So much for certainty in the tax system. The way things are going, even simple tax planning will soon be out of the question.

As taxpayers we seem to be in this situation where we do not even have a basic idea of what we may or may not do to order our tax affairs.

I do a lot of tax consultancy, and I cannot even begin to tell you how often I have had to unravel simple tax planning arrangements made for clients because of ham-fisted attempts by the Government to crack down on complicated tax avoidance. Many times, in attempting to clobber a targeted group, the Government has enacted legislation that has had unintended effects on taxpayers who were not even within its sights in the first place. Many times, tax legislation has been rushed through, only to be repealed soon after, as the consequences (always predicted by tax experts, and ignored by the Government) later became apparent.

I hope, for the sake of the commenter above, and many others in his position, that the Treasury revisits the issue of the abolition of taper relief. The point of the proposed legislation was to increase the tax paid by private equity barons, who, it was accepted, were paying comparatively little tax. The sad thing is that, in its clumsy, bumbling way, the Government has come up with a ’solution’ that increases significantly the tax burden on other people.