29.08.18
Use entrepreneur tax relief cash to help fulfil NHS £20bn funding pledge, think tank says
Entrepreneurs’ Relief should be scrapped to fund Theresa May’s extra £20bn a year pledge for the NHS, a leading think tank has said.
The Resolution Foundation’s latest release today found that Entrepreneur’s Relief— which allows people selling companies to pay half the normal rate of capital gains tax (10% as opposed to the current top rate of 20%) on up to £10m of gains— is “expensive, ineffective, and regressive.” It called for the tax relief to be scrapped as part of Treasury plans to raise taxes to meet the £20bn spending increase by 2023 pledge by the government in June.
The think tank noted that following Labour chancellor Alistair Darling’s announcement of the scheme in 2008, “increased generosity and greater than expected use” meant that actual spending on relief had soared to £2bn by 2011-12 — with HMRC estimates that last year it cost the UK economy £2.7bn.
Senior economic analyst at the Resolution Foundation, Adam Corlett, said: “The UK’s £2.7bn Entrepreneurs’ Relief is hugely expensive and overwhelmingly benefits a small number of wealthy individuals. There has also been no serious evaluation of the relief, despite it costing £22bn over the past decade.
“As the Treasury wrestles with how to raise revenues to fund the prime minister’s pledge of £20bn for the NHS, they should start by scrapping this expensive, regressive and ineffective tax relief.”
The think tank went on to say that there is “no evidence” that the Entrepreneurs’ had led to any substantial increase in genuine entrepreneurship—the number of self-employed people that have employees actually fell during the financial crisis and has remained at or below 600,000 since 2010.
Chief executive of NHS Providers Chris Hopson commented on whether the £20bn NHS settlement can really deliver in our latest edition of NHE.
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Image credit: Ubermenschmatt