Darling expected to make CGT concessions

10/12/2007

The chancellor will this week announce a series of concessions to his controversial reform of capital gains tax (CGT), it has been reported.

The changes follow a period of sustained pressure on the chancellor from business lobby groups about the effect scrapping taper relief will have on small firms.

However, the changes which are expected to be revealed tomorrow may not go as far as some small companies might have hoped, according to the Sunday Times.

Treasury officials have told the newspaper that most of the reforms announced in the pre-budget report will stay the same – including the scrapping of taper relief, which raises CGT paid on equity sales from to 10% to 18%.

“The Treasury’s proposals will hit not just private equity but thousands of venture capitalists, family businesses and small and medium-sized companies,” says Simon Walker, chief executive of the British Private Equity and Venture Capital Association (BVCA).

“A rate of 18% means capital gains tax is higher in Britain than France, Italy or the US.

“Above all what businesses, including private equity and venture capital need is certainty and stability.”

The Federation of Small Business (FSB) says that the chancellor should grant 50% tax relief on business assets up to the value of 750,000 and limit the tax rate to 9% for smaller firms.

John Wright, FSB national chairman, said: “We’re pleased the chancellor has acknowledged the outrage in the small business community about the plans to abolish taper relief on CGT.

“Our proposals would protect small business owners that have worked hard over many years to build up a business and want to sell it to pay for their retirement.”