The former head of HM Revenue and Customs has called on the government to scrap a controversial tax break designed to help entrepreneurs, which he said was costing the country £2bn a year in lost tax yet provided “no incentive for real entrepreneurship”.

Sir Edward Troup, who was executive chair of HMRC from 2016 until January 2018, said whichever party won the general election on 12 December should abolish the “entrepreneurs’ relief” applied to capital gains tax (CGT).

Troup’s intervention on Wednesday came in response to a Guardian report on Tuesday showing thousands of the country’s richest people were exploiting the policy to pay as little as 10% tax on billions of pounds’ worth of capital gains.

Tom Gauterin (@Ruralmaestro) Good to see you pointing out this obvious truth. The increase in cap from £1m to £10m is the single biggest giveaway I've seen in my career.

“This inequity would be almost entirely eliminated by the abolition of entrepreneurs’ relief,” Troup, who had been a commissioner of HMRC since 2012, tweeted. “It gives £2bn CGT savings every year to those who have already made their gains and provides no incentive for real entrepreneurship.”

Troup later said that entrepreneurs’ relief – which reduces the tax bill on capital gains from 20% to 10% – had a “minimal impact on encouraging entrepreneurship in the UK”.

He suggested that some of the thousands of people who applied for the relief were not in fact entrepreneurs, and that even if the break was being taken up by real entrepreneurs it was “not the best way to spend [government] money”.

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Troup said: “The point of entrepreneurs’ relief is that it rewards you when you make a lot of money. There are lots of things getting in the way of people becoming great entrepreneurs in this country, but the fear of tax on future gains is not one of them.

“Absolutely, the government should be helping [entrepreneurs] set up great businesses here, but the idea that having to pay more tax at the end is preventing their inventing things is nonsense.”

Troup, who is now a consultant at McKinsey, said there was a “very strong case for [whichever party won the election] to ramp down entrepreneurs’ relief immediately”.

Business owners can qualify for entrepreneurs’ relief, under which they can pay just 10% CGT, when they sell all or part of a company, up to £10m. The standard CGT rate is 20%. This compares with the 40% income tax rate on salaries from £50,001 up to £150,000.

HMRC data shows that 9,000 people paid just £5.1bn in tax on £33.7bn of capital gains income, in the latest financial year available. That works out at an average tax rate of 14.8%, lower than than the basic rate income tax of 20% which people pay on salaries of between £12,501 and £50,000.

People recording gains of more than £1m each accounted for 62% of all capital gains receipts in the 2017-18 financial year, the latest available data set.

The data also shows that the existence of the tax break cost the government £2.2bn in lost taxes collected in the 2017/18 financial year.

A Treasury spokesperson said entrepreneurs’ relief was now a party political matter in the run-up to the election but declined to comment. On Tuesday the Treasury said: “We want a tax system where everyone pays their fair share, while also ensuring supporting investment and growth.”

The Conservative party did not respond to requests for comment. On Wednesday, the prime minister, Boris Johnson, launched the Tories’ election campaign with a pledge to create a “high-wage, high-skill, low-tax economy”.

“When someone gets up at 5am to get their shop ready, when someone risks their savings on an idea or a new product, when someone has the guts to enter a new market, at home or abroad, we don’t sneer at them,” Johnson said in a column for the Daily Telegraph.

Corbyn has promised that a Labour government would “go after” super-rich people who exploited a “rigged system” to benefit themselves at the expense of the many. The Labour party did not respond to requests for comment about whether or not it would act to scrap entrepreneurs’ relief.

The entrepreneurs’ relief scheme was introduced in 2008, under Gordon Brown’s Labour government. At first it was limited to £1m per person, but the cap was increased several times and raised to £10m in 2011, under the Conservative-Liberal Democrat coalition.