UK Parliament / Open data

Growth and Infrastructure Bill

My Lords, I apologise for referring again to the coalition agreement, but I am concerned that the tax loopholes proposed under the CGT allowances for employee shareholders conflict with the coalition agreement because the shares that a company gives to employee shareholders will not be liable to CGT.

Paul Johnson, the director of the IFS, has said:

“Just as government ministers are falling over themselves to condemn such behaviour, the same government is trumpeting a new tax policy which looks like it will foster a whole new avoidance industry”.

He refers to it as a “£1 billion lollipop”. I am prepared to negotiate the billion with Paul Johnson on the understanding that it is only likely to affect a small number of companies. Or perhaps not, because we know that advisers to companies, if they find a loophole will find a way of making it apply to everyone.

The Government have pledged in the coalition agreement to clamp down on tax loopholes and tax avoidance. The agreement says:

“We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals”.

These include exactly what I have cited earlier. Why do the Government in the draft Finance Bill 2013 create this loophole where shareholders can avoid paying capital gains tax? I quote:

“Legislation will be introduced to exempt all gains made on disposals of up to £50,000 worth of ‘employee shareholder’ shares from capital gains tax”.

The coalition agreement also says:

“We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income”.

We have pledged, as a Government, to raise capital gains tax and yet we are removing it for shares related to employee shareholders. I support the amendment because we need to understand the cost to the Treasury. I would welcome an explanation from the Minister why it is acceptable for one small group of shareholders to be exempt from CGT when the Government are moving in the opposite direction for all others.

Type
Proceeding contribution
Reference
743 c303 
Session
2012-13
Chamber / Committee
House of Lords chamber
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