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Businesses will be hit by an increase in Capital Games Tax (CGT) despite exemptions for entrepreneurial activities, warns an industry body.

The British Chambers of Commerce (BCC) says it ‘fundamentally’ disagrees with the proposed changes due to the potential effects on business investment, voicing concerns on how non-business and business assets will be differentiated.

‘There is an inherent contradiction between the government's desire to simplify Corporation Tax, and the inevitability of greater complexity in the CGT system,’ it said in a submission to the Treasury ahead of the emergency budget next week.

Adam Marshall, director of policy and external affairs at the BCC, says: ‘Our biggest concern is that business growth would be affected if CGT increases to near income tax levels without very clear exemptions for enterprise and entrepreneurial activity. Such a system may result in individuals and businesses in the UK putting off investment.’

In a poll from the BCC, 45 per cent of business owners believe that the proposed changes would have an adverse effect on enterprise, while 72 per cent are very concerned about the issue of asset differentiation.

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