Analysts warn thousands of investors in share ownership schemes will be subject to an 18% tax on profits, an increase of up to 13% on the present rate, after chancellor Alistair Darling removed taper relief and introduced a flat 18% capital gains tax (CGT) rate.

Darling’s CGT relief for entrepreneurs will still leave hundreds of thousands of small investors in ‘save as you earn’ and share option schemes falling into the 18% band for CGT liability from April 6 this year, The Independent reports.

‘The replacement of the taper relief currently available to investors in companies (not listed on a stock exchange) would mean that instead of paying an anticipated 10% tax rate on disposal after three years, this would soar to 18%,' Jason Hollands of F&C Investments said.

He said the measure would particularly hit owner-entrepreneurs, who often rely on share ownership schemes as a way of raising cash for their businesses.

Further reading:

CGT loan note dilemma hits entrepreneurs

Employers bodies unconvinced by CGT relief

Read story in The Independent