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Venture capitalists join opposition to CGT increase

A leading private equity organisation has warned of the harm that any significant rise in capital gains tax may do to the economy.

The British Venture Capital Association (BVCA) has written a letter to its 220 members asking them to encourage the owners of their portfolio firms to contact their MPs in advance of the emergency Budget.

Currently, CGT is charged at a flat rate of 18 per cent, but the government has mooted plans to raise the rate closer to that of higher rate income tax for non-business assets.

However, the BCVA believes that such a move would risk the competitiveness of the UK economy.

In a communication sent out to members, Simon Walker, the BVCA chief executive, said: "I am writing to urge you to encourage your portfolio companies to write to their local MPs to impress upon them the importance of competitive CGT rates in securing venture and private equity funding for their business, to help create jobs and grow the UK economy."

Companies have been supplied with a template letter, which can be used to contact MPs.

The letter argues that a sharp rise in CGT would "jeopardise our ability to attract investment and grow our business".

It also presents the case for an exemption for all business assets, as was provided when taper relief formed part of CGT, rather than maintaining or extending entrepreneurs' relief.