Business group calls for reform of CGT relief

THE CHANCELLOR should extend tax relief on capital gains tax in the March Budget to encourage private-sector growth, a trade association has said.

The Quoted Companies Alliance (QCA), which represents UK small and medium-sized companies, has called on the government to scrap a restriction on entrepreneurs relief, which reduces the CGT rate on the disposal of business assets and shares from 28% to 10%.

Currently, only employees and officers that have a 5% shareholding can qualify, which, according to the QCA, penalises those working in a high-capital and high-growth business that attracts a great deal of outside investment.

The QCA said that the government to scrap the "anomalous" five per cent requirement in order to "stimulate growth in the UK economy by rewarding employees' contributions in growing the value of the businesses they work for".

To fund this relief extension and ensure it promotes long-term investment, the QCA said that the period that shares have to be held before qualifying for relief should be extended from one to three years.