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SME trust in government 'eroded'

Jan 31 2008

SMEs' trust in the government may have been 'eroded' by the controversy surrounding capital gains tax (CGT), one business expert has claims.

The National Federation of Enterprise Agencies (NFEA) said that despite the chancellor listening to SME owners and revising the original plans to CGT, this was only good news up to a point.

George Derbyshire, chief executive of the NFEA, says: 'The tragedy is that this controversy and the widespread concern amongst small business owners ever arose in the first place.'

'Consultation at the outset might have avoided this situation,' he adds.

The NFEA also said that it gives the 'wrong message' by inflicting substantial tax rate increases on SME owners who have built up businesses up over time.

Taper relief on CGT was abolished and was to have been replaced with a standard rate of 18 per cent.

However, following an outcry from SME owners, the Chancellor announced that business owners would pay 10 per cent CGT on selling their business if it was under £1 million in value, rising to 18 per cent when above this figure.

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