Slap in the face for UK entrepreneurs

by Catherine Woods - Tuesday, 16th October 2007

This is one announcement you’re not letting Gordon Brown, Alistair Darling, et al, get away with.

“A complete betrayal of the UK’s entrepreneurs” is how Jan Hruska, co-founder of Sophos, has described the move to introduce one flat capital gains tax rate of 18 per cent.

“When the 25 per cent taper relief was introduced, entrepreneurs were told to grow their businesses, employ more people and work hard to make a success of it,” Hruska says.

“They have done it. Their reward? An 80 per cent increase in tax on capital growth. Very motivating, indeed.”

Like many of us, Hruska is convinced the move will deter entrepreneurialism in the UK and believes the government has made a huge mistake. However, he says it is a mistake that “will become apparent only after a number of years, probably after the current lot of treacherous politicians are long gone”.

Scathing.

But he’s not the only entrepreneur who’s speaking out.

Sarah McVittie (co-founder of Texperts) and Duncan Cheatle (who launched The Supper Club) have formed a Facebook protest group that now has 475 members. One wall post reads: “Labour has burned its bridges with me on this one I think – and I never thought I'd think that.”

Another group member writes: “This tax hits me massively… But it also potentially takes a chunk out of the hands of the 300-plus colleagues in my firm that we have enfranchised and motivated through EMI options. Slap in the face for enterprise.”

And this from another angry entrepreneur: “Successful entrepreneurs are the next generation of angel investors. This reinforcing cycle of success and investment is what makes an economy entrepreneurial.

“This 18 per cent CGT decision will simply divert cash that would most likely be available to new businesses for investment into government spending.”

These are all valid points and raise a couple of key questions:

Is the government listening?

Does the government care?

Will the government reverse its decision?

Tags: pre-budget report, texperts, sarah mcvittie, facebook, sophos, capital gains tax rate, gordon brown, angel investors, alistair darling, duncan cheatle, jan hruska, supper club,