The report considered the two main reliefs which are in place to encourage investment, that being Investors’ Relief (IR) and Business Asset Disposal Relief (BADR).
These reliefs reduce CGT payable on the disposal of qualifying business assets, by the application of a lower 10% tax rate.
The OTS concluded that the rate of tax is not really an incentive on its own and rather investment incentives should apply at the time the investment decision is made, which presents the argument for scrapping these business reliefs.
BADR, along with its predecessors, was recognised as a retirement relief and the proposals suggest that this relief should be geared towards those business owners who have built up their businesses over time and are of a certain age.
On the other hand, the OTS recognise that IR is a new relief and there is little evidence of people making use of the relief. However, it could be argued that this conclusion is premature as many who will take advantage in the first year this applies (2019/20), will only just have submitted their Tax Returns and we look forward to seeing the statistics on the uptake of this relief.