View more on these topics

Private equity tax swoop may hit IFA firms

‘Taper relief has been tremendously successful in encouraging entrepreneurial spirit’

Advisers have warned that any Government moves to clamp down on private equity tax breaks must not attack the valuable business asset taper relief that has allowed IFA firms to flourish.

Positive Solutions chief executive Neil Johnson says he is concerned the controversy over the amount of tax paid by private equity firms may lead to an increase or removal of business asset taper relief across the board.

Johnson considers that the relief has helped adviser firms such as PosSol grow organically by offering staff incentives through share options that benefit from the taper relief.

Business asset taper relief allows employees to benefit from 10 per cent levels of capital gains tax, compared with 40 per cent, on assets such as unquoted share options as long as the assets are held for at least two years. After one year, the tax level is 20 per cent.

Private equity firms benefit from the relief as the profits from selling companies are classed as “carried interest” and are eligible for the same relief.

Johnson says: “My concern is that the law of unintended consequences may lead the Government to ruin one of the best ways of encouraging small businesses. This relief has been tremendously successful in encouraging entrepreneurial spirit in businesses such as IFAs and removing or lowering it would be a massive mistake that could severely damage the industry.”

There is a growing belief that the Government will act to increase tax levels in this area.

The Treasury select committee is currently conducting an inquiry into the private equity sector and the issue has been a high priority for Labour deputy leader candidates.

Last week, British Private Equity and Venture Capital Association chief executive Peter Linthwaite resigned after being criticised by members of the Treasury select committee and this week the committee hears evidence from a number of private equity companies.


Short memories

Whenever I have a few drinks with IFAs, I am always struck by their loss of memory – nowhere more so than in current discussions over the recent decision by the FSA to scrap the payment menu and initial disclosure document.The regulator’s stated reason is that there were concerns from the European Commission that they […]

Hard times

With direct sales a dying breed, there is not such an obvious entry into becoming an adviser. Long gone are the days when you could transfer from a different profession and carve a career within financial services. When I began recruiting in the late 80s and early 90s prior to the reviews, I enjoyed placing nurses, teachers, milkmen and police constables, etc, as financial advisers. Brokers, lenders and providers now expect to recruit staff that can hit the ground running and struggle to fill vacancies.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm