Entrepreneurs who sell too soon should be hit with high tax rate

Daniel Pinto is chief executive of London based Stanhope Capital, which manages £6 billion on behalf of its clients. He is campaigning for a dramatic change in culture in the City away from the obsession with short-term gains.

Among his concerns is that the tax regime does not encourage company founders or investors in young businesses to take a truly long-term view.

‘I would be in favour of capital gains tax that meant you could gain from a long-term investment, but shorter gains should be charged at a very high rate,’ he told The Mail on Sunday.

Capital gains tax rates stand at 18 and 28 per cent depending on the size of the gain, compared with the 40 or 45 per cent for high earners’ incomes.

Pinto said investments of ten years or more should be taxed at far lower or even zero rates to encourage a return to long-term family-run firms. He said: ‘In the UK you have this constant urge to go public on the stock market.’

Pinto, whose company invests on behalf of wealthy families, as well as a large number of charities, said that the focus on short-term results is also damaging innovation in Britain’s bigger companies.

‘Boardrooms have become the most conservative force in capitalism because they are put under pressure by fund managers to deliver short term,’ he said, claiming that this pressure was stifling risk-taking and innovation.

Pinto, whose argument is outlined at length in his recently published book Capital Wars, is also a founder of New City Initiative, a group of independent investment companies which between them manage £350 billion in client assets. It is campaigning for reform in the City and in particular a focus on owner-managed companies.