Darling tempers CGT changes with lifeline for smaller businesses
Jan 24 2008
Chancellor Alistair Darling has unveiled changes to his capital gains tax (CGT) plans, offering a lifeline for smaller entrepreneurs.
He confirmed that taper relief would end on 1 April and that a flat 18 per cent rate would take its place. However, he tempered the move with a ten per cent rate on gains up to £1 million following strong criticism from small business organisations.
Darling claims that about 80,000 people would benefit from the relief, saving up to £200 million per year. The announcement met with missed responses.
The Federation of Small Businesses welcomed the changes, with chairman John Wright saying, ‘The entrepreneurs’ relief announced today is close to the proposals we put forward at the end of last year. They will go some way to protecting entrepreneurship in the UK as well as benefiting small business owners planning to pay for their retirement with the sale of their businesses.’
However, Francesca Lagerberg, head of national tax at Grant Thornton, believes that, although the announcement lays to rest months of uncertainty in the business community, it ‘provides little long-term relief for entrepreneurs and employees with share-option schemes.’
She continues, ‘For most businesses, certainty is key, but they've been held in an unacceptable state of limbo since October last year as the Treasury tried to remedy this hasty piece of legislation.’