There’sbeennothingbutcomplaints–andasthedaysgobyincreasinglyvitrioliconessinceAlistairDarlingmadehisPre-Budgetspeechonthe9ofOctoberproposinganew18%flatratecapitalgainstax(CGT)forall。

(ToreadourbriefingontheCGTchanges,clickhere:Darlingsdaringtaxreforms。

TheBritishChambersofCommerce,theCBI,theFederationofSmallBusinessesandtheInstituteofDirectorsfeelsostronglyaboutthewholethingthatthey’vegottogethertowritealettertoDarlingtomakeclearthedepthoftheir“sharedconcern”abouttherisksof“seriousdamagetothiscountry’sentrepreneurialculture。



Hotontheirheelscameapetitionsignedby9,000entrepreneursandpostedontheDowningStreetwebsite。

Theorganiserofthepetition,DuncanCheatle,founderofentrepreneursgroupTheSupperClub,hasbeentellingeveryonewhoasksthat“entrepreneursarenowsayingthatthey’dratherinvestinpropertybecausewhat’sthepointoftakingrisksandinvestinginbusinesses。

”Listentohimandhissupportersandyou’dthinkthedirectandimmediateimpactofthechangewouldbethetotalcollapseoftheUKeconomy。

Butarethechangesreallythatterrible?

Lookalittlecloserandyouwillseethattheyarenot。

Thesmallbusinesslobbyisfondofsayingthattheirtaxbillsareto“double”butthisisonlythecasebecausetheywerestartingfromsuchalowbase(10%)inthefirstplace。

NowitisclearlytruethatanyonewhosellsabusinessafterAprilwillenduppayingmoretaxonthebillthananyonewhosellsbeforeApril。

ButifanyoneisgoingtosuggestthismeanstheendofentrepreneurshipintheUKtheymustthinkthatknowingaboutitinadvancewouldhavestoppedthosepeoplesettingupbusinesseswhentheydid,whichI’mprettysuchitwouldn’thave。

AsurveyoutlastweekfromOrangeBusinessServicesshowedthatwhilenearlyhalfofallUKadultshavethoughtaboutsettinguptheirownbusinessesoneintwoofthoseare“tooscared”todoanythingaboutit。

Anditisn’ttaxestheyaretooscaredof。

No,taxesaren’tevenonthelistofterrifyingthingsatall。

Insteadmostpeoplearescaredoffailure(whichisentirelyreasonable–mostbusinesesfailwithin12months)。

Mostentrepreneursstartoffthinkingaboutbuildingbusinessesandmakingmoney,notsellingthemandpayingtax–I’dbesurprisedifhalfthosetryingtoraisemoneyfortheirbigideasnowknowhowthecurrentcorporationtaxsystemworks,letalonetheCGTsystem。

Ialsodon’tbuytheideathatthesharpriseinCGTforinvestorsinsmallcompanies(againfromaneffectiverateof10%to18%)shouldputyouoffifyoucomeacrosssomethinggood–letsnotforgetthatyoudon’tpaytaxunlessyoumakemoney!

Northatyoucanmake£9,200ayearincapitalgainsbeforeyouevenhavetostartthinkingabouttaxatall。

Athirdgroupofpeopleconcernedabouttheimpactthenewrulesmighthavearestaffworkingforpublicallylistedcompanieswhohavebeenabletobuysharesintheircompanyaspartoftheircompensatioinscheme。

Theytoousedtobeabletopayarateofonly10%onanygainstheymadeiftheyheldontotheirsharesfortwoyears,andfromApriltheytoowillpay18%。

ButonceagainIdon’tseetheproblem。

18%reallyisn’taveryhighrateandattheriskofgettingrepetitiveitisvitaltorememberthatyoucanmakecapitalgainsof£9200everyyearbeforepayinganytaxatall。

1。

7millionofusownsharesinthecompaniesweworkforbuthowmanyofusownsomanythatwearegoingtouseupourallowanceeveryyearifwesellthem?

Notmany。

So,letsgobacktotheidioticstatementfromDuncanCheatlethattheentrepreneursheknowswouldnowprefertoinvestinpropertythaninnewbusinessesbecauseitissomehowabetterbet。

Thiscan’tpossiblyhaveevenagrainoftruthinit。

Itisnowcleartoanyonewhocanaddupthatthebuytoletbusinesshasgonebad。

Onlyafewyearsagoyoucouldbuypropertiesthatwouldpayyoumoreinrentthattheycostyouinmortgagewiththeresultthatyoumademoneybothincashtermseverymonthandincapitaltermsasthevalueofyourpropertyrose。

Butthat’snottrueanymore。

Nowrentalyieldsacrossthenationarelowerthanmortgagecosts。

(Ifyoucangetamortgageatall,ofcourse–apparentlytherearenow40%fewerproductsonthemarketthantherewereevensixmonthsago。

)Worse,capitalvaluesofhousesandflatsaren’tgoingupanymore(inmanycasestheyaregoingdown)。

(FormoreonthecurrentstateoftheUKpropertymarket,read:WhytaxchangeswontsavetheUKpropertymarket)。

Sowhywouldyoubuy?

Entrepreneursaresupposedtobegoodwithnumberssomyguessistheywouldn’t,regardlessofthetaxsitutation。

Thetruthisthis:ifyouwanttobereallyrichthebestwaytodoitistostartyourownbusiness。

Getitwrongandthere’llbenotaxtopayanyway。

GetitrightandwhenyoucometosellformillionsofpoundsIcanassureyouyouwon’tevennoticean18%taxbill。

Mostofusknowthisandthat’swhy81%of25-34yearoldstoldtheOrangesurveyImentionabovethattheywouldreallyliketosetuptheirownbusinessesatsomepoint。

ForinformationonhowtodothisseemyownbookLoveisNotEnough:TheSmartWoman’sGuidetoMakingandKeepingMoney,orforamoredetailedhow-tolookatthingsseeStartingaBusinessforDummiesbyColinBarrow。

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