While the government have long been on the trail of the mega rich Private Equity companies , the companies which are seen by many as asset strippers, will the recent capital gains tax changes have the desired effect? 

Prior to the recent budget, Private Equity investors were able to reduce their tax burden down to a minimum of 10% by holding their investments for a certain length of time.  This was supposed to be their reward for investing into companies which may have been in financial trouble, or required additional investment.  Then the authorities turned against them!

The government recently pushed through an across the board change to capital gains tax rules which set a flat rate of 18%, rather than the current 0% to 40% formulae, which depended upon what you bought, how you bought it and how long you kept it.  So now the 10% rate for the Private Equity companies has gone, but so have a raft of incentives for the traditional worker!

For years many companies such as Tesco have used SAYE (Save As You Earn) schemes to encourage their employees to invest (tax free) into shares in the company.  Under the old government rules they were allowed to take any profits free of tax if the shares were held for a certain length of time (often 3 years).  However, in their quest to attack the rich, the authorities have inadvertently brought the normal worker into play and taken away what little tax incentives there were for investing in SAYE and other similar schemes

The changes have also effected the small business person, where under the old rules they were allowed to taper their tax relief the longer an asset was held.  Under the new rules many will see their rate of tax increase from 10% to 18%, and these are not companies or business people earning millions of pounds!