Responding to the Chancellor's announced changes to Capital Gains Tax in today's Pre Budget Report, Simon Walker, Chief Executive Designate of the BVCA - The British Private Equity & Venture Capital Association - said:
"The BVCA notes that the Chancellor has placed emphasis on innovation, enterprise and the need to maintain the UK's competitive position.
"However, we are concerned that the elimination of taper relief means all capital gains, including carried interest, will now be taxed at a single rate no matter how long they have been held. This move will hit not just private equity but thousands of venture capitalists, family businesses and small and medium-sized companies. A rate of 18% means capital gains tax is higher in Britain than France (16%), Italy (12.5%) or the US (15%) - let alone countries like Switzerland which have no CGT.
"The British private equity industry - which accounts for 60% of the European market - is core to maintaining London as the world's financial capital. We regret the rise in the effective rate our investors will pay, but hope the industry will now be recognized for the contribution it makes to pension funds and the wider economy. Above all private equity and venture capital need certainty and stability."
For further information please contact Elle Dormer on 020-7025 2967 or 07739-728 079
i) The BVCA - The British Private Equity and Venture Capital Association is the industry body for the UK private equity and venture capital industry.
ii) The BVCA has over 400 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.
iii) The UK private equity and venture capital industry accounts for almost 60% of the whole of the European market.
