If the tax cut was scrapped, it could be spent giving every household £100 a year.
A professional association for accountants has called on the next prime minister to scrap Entrepeneurs Relief – which costs the taxpayer over £4bn a year.
The Association of Accounting Technicians (AAT), which made the statement, represents 140,000 members including over 4,000 licensed accountants.
Entrepeneurs Relief means that people selling their stake in a business often pay less Capital Gains Tax than they would otherwise.
The AAT said that their members’ clients (small business owners) are unaware of Entrepeneurs Relief until they decide to sell their business stake anyway – so it doesn’t encourage entrepeneurialism like the government claims.
The AAT called Entrepeneurs Relief “expensive, misguided [and] ineffective”.
The Office for Tax Simplification has also said in the past that the tax relief does not encourage entrepeneurialism.
The Resolution Foundation has called it the “worst tax break” as they say it helps just a few wealthy individuals.
They say that the £2.7bn spent on it is enough to double the intelligence service’s funding or give every household £100 a year.
The AAT cited Treasury figures showing that, while the cost was £2.7bn in 2013-2014, by 2015-2016 it had risen to £4.2bn.
Entrepeneurs Relief was first introduced by Labour under Gordon Brown and then was expanded by the Conservative government under George Osborne. It was initially supposed to cost just £200m a year.
This article was updated to include the Treasury’s 2015-2016 figures on the cost of Entrepeneurs Relief
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