According to a survey by accountants MacIntyre Hudson, 82% of respondents said cutting inheritance tax should be the top priority for reform – not capital gains tax or the treatment of non-doms. In fact, changing the threshold for the top rate of income tax and cutting stamp duty both ranked ahead of CGT changes.
Of course, that’s not to say that people are exactly thrilled about the Chancellor’s CGT proposals (to replace taper relief and indexation with a flat rate of 18%). More than 70% of current owner-managers thought it was a terrible idea, while three quarters said it would damage entrepreneurship in the UK and half claimed it would make them think twice about setting up a business (though we’re not entirely convinced they’d be put off so easily in practice).
Generally, the consensus was that the new rate is entirely fair for the group it was supposedly introduced to target – mega-rich private equity bosses – but not for everyone else (no indication of how many PE types the researchers spoke to, but our guess is: not many).
However, according to MacIntyre Hudson the business community is much more aggrieved about inheritance tax, with 83% denouncing it as an ‘unfair tax on wealth that has often been built up out of post-tax income’. There was a near-unanimous thumbs-up for Darling’s recent move to transfer a person’s allowance to their spouse when they die (which would take the total allowance up to £700,000 by 2010). But people want more – the Tories’ proposal to raise the threshold to £1m was also universally popular.
Another popular Tory suggestion – even among Labour voters – was the scrapping of stamp duty for first-time buyers of properties worth less than £250,000. The research found that stamp duty was another very unpopular tax, with almost 80% of respondents suggesting it needed reform.
So all this considered, it’s no wonder that Shadow Chancellor George Osborne (MT’s current cover star) has seen his reputation rocket in the last few months. Clearly the Government hasn’t exactly helped itself, but Osborne’s recent offerings seem to have put the Tories well and truly on the front foot – particularly his inheritance tax proposals, which seem to have staved off the threat of an autumn election that his party would almost certainly have lost.
One thing’s for sure: it looks as though the political affections of the business community are now well and truly up for grabs...