Lord Sugar speaks out over proposed CGT rise

Former Amstrad boss claims rise would have "devastating impact" on entrepreneurs who set up firms to be floated or sold

Lord Sugar: Raising capital gains tax rates will depress employees' desire to work hard

Lord Sugar has sounded a last-minute warning over the effect increasing capital gains tax (CGT) could have on entrepreneurship.

The former enterprise tsar initiated a House of Lords debate on the subject yesterday, in the hope that the coalition government’s position could still be influenced.

The Liberal-Conservative government has previously suggested it could more than double CGT on non-business assets from its current rate of 18 per cent. Although it has signalled that there will be exemptions for entrepreneurial activity, it has not yet expanded on what these might be.

Lord Sugar said any rise would have a “devastating effect” on those who set up their own firms with a view to either floating them or selling them through a trade sale.

He also argued that the current £2m "entrepreneur relief" was too low to meet the aspirations of growth companies, particularly those in the tech sector.

“That big payout is the ultimate goal for such entrepreneurs and their loyal employees,” Lord Sugar said. “Raising capital gains tax rates will not encourage employees of public or private companies who have been incentivised with approved share option schemes. It will depress their desire to work hard.”

The former Amstrad boss also questioned the government’s motives for hiking CGT.

“I would hate to think that a significant increase in capital gains tax, albeit delayed until next April, would induce a fire sale of assets that would depress certain market sectors,” he said. “Is it the government's real agenda to generate a massive windfall of revenue in order to boast in a year or so's time?”