New Businesses: Capital Gains Tax

Lord Bilimoria Excerpts

Wednesday 20th January 2021 Lords Chamber

[Baroness Penn (Con)]

My Lords, as I said, the Government recently changed the regime for business asset disposal relief, but I reassure my noble friend that the change has kept the relief focused on small business owners and that over 80% of those using the relief were unaffected. On his second point, carried interest is a share of the profits made by a financial fund which is treated as capital gains; the Government have no plans to change rules around carried interest, but we keep all tax policy under review.

[Lord Bilimoria (CB) [V]]

My Lords, our tax system needs to support a competitive and dynamic economy. Businesses have suffered hugely during the pandemic. Does the noble Baroness agree that now is not the time to talk about raising taxes via capital gains tax or corporation tax? Does she also agree that raising taxes will stifle our recovery from the pandemic and hamper business investment and inward investment into the country, making our economy and businesses less competitive? We need to encourage entrepreneurship and investment into businesses; that will create the jobs that pay the taxes, which will increase our tax take.

[Baroness Penn (Con)]

I absolutely agree with the noble Lord’s sentiment about the importance of entrepreneurs and businesses to the country’s recovery. As I said to my noble friend earlier, the Government always consider the need to balance raising revenue with the principles of fairness and market efficiency. However, I cannot deny that, in future years, we will have some difficult decisions to take on balancing the books and recovering from the pandemic.