In a rather strange move it looks like the capital gains tax changes announced recently could be exempted for venture capitalists.
Lord Sainsbury, former science minister, said that if a case was made for exempting start-up investors and entrepreneurs there was a chance of exemption. He said:
If you focus your argument on the entrepreneur end of things, there might be scope for getting a change back to a lower tax rate for people investing at the early stage of businesses.
The Government had said it would introduce an 18 per cent capital gains tax for everyone. At the time it looked as if it was aimed at big, hungry private equity firms but would, of course, hit VCs and seed funders.
Now this may not be the case, if the VCs can argue their case! It is a very strange way of taxing the nation. I could argue the case for a having a lower personal tax band just for me, I could make that case quite strongly too. Why is the Government changing the tax rules and then saying ‘Well, we won’t if you persuade us not to’. Quite bizarre.