I will start by outlining the Government amendments in the group before responding to some of the points that have been made by hon. Members in what has been a thoughtful debate. As a new Treasury Minister, I have found a number of the speeches good food for thought as I look forward to a series of meetings into the autumn.
On Government amendments 149 to 151, the Finance Bill provides an incentive for people to invest in companies by reducing the main rates of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. We announced at the Budget that the 28% and 18% rates would continue to apply for carried interest. That is justified by the fact that carried interest is a performance-related award that is hybrid in nature, with characteristics that distinguish it from most other types of capital gain, as was alluded to by some hon. Members. We recently learned that it is possible to create an investment fund structure generating carried interest that, under clause 82 as it stands, would be taxed at 20% or 10%. That would clearly be unfair and contrary to policy. The amendments therefore ensure that the continuing 28% and 18% rates apply to all forms of carried interest.
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I welcome the support of my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) for the general approach that we are taking in a number of measures in the Bill and in particular for his comments on this matter and the knowledge of it that he brings to the House. I also welcome the support of the Opposition Front-Bench team for the amendments, which we feel strike a sensible balance.
Labour’s amendment 174 would delete clause 82 in its entirety. The lower rates of capital gains tax introduced by the clause make it more attractive for people to invest in companies, helping those companies access the
capital they need to grow and create jobs. The changes are part of this Government’s efforts to ensure that our tax system is competitive—never more important than now, as we head into a new future outside the EU—and encourages investment, which will help drive our economy forward into that new future. At 28%, our higher rate of capital gains tax was among the highest in the developed world. We do not want high tax rates to deter investment.