E&Y has issued scathing criticisms on Alistair Darling's CGT taper reform, which will see a capital gains flat rate of 18% imposed from April next year.

Paul Davies, UK head of tax said, 'The changes we saw today are clearly motivated by the heightened focus on private equity. We are extremely disappointed with these proposals as they threaten to undermine the entrepreneur culture that has blossomed over the last decade.'

Davies added:'It also represents a fundamental retreat from his predecessor’s key policy. The taper applies to many more areas than private equity and this will increase the tax paid by many employees of companies which offer other share incentives.'

Darling also announced aviation tax changes designed to put £520m in the taxman's coffers by 2010/11, but E&Y gave the move short shrift.

Chris Sanger, head of tax policy at Ernst & Young, said: 'The changes on Air Passenger Duty mark a new extreme of meddlesome fiddling. For just a year, until November 2009, the airlines which operate a single business class model will now have to pay the highest rate of APD.

'In order to achieve this, HMRC is creating arbitrary definitions around the detail of plane seating.The air passenger industry now has a year of consultation ahead during which it will have to wrestle with proposals for the introduction of a single tax per plane, rather than the current APD.'

Despite Darling's IHT overture being cleverly targeted in its opinion, E &Y experts said that the measures did not go as far as they could have done.

His proposals fell far short of what some had predicted, said tax partner Patrick Stevens: 'Although inheritance tax is only paid by about 35,000 people - according to government figures - it remains a highly contentious tax as far more people expect to have to pay in the future.'

The Big Four firm also issued a warning that non-doms could be next in the firing line despite Darling sparing them in the PBR.

Tax partner Andrew Tailby Faulkes: 'The chancellor has resisted a knee jerk reaction to the conservatives’ proposal of a flat annual charge on resident non-domiciliaries. Instead he will consult with a view to early legislation, one of the proposals being a levy after seven years of living in the UK and a higher charge after 10 years. This could be a blow to many RNDs, who can currently enjoy the favourable "non dom" tax regime in the UK for far longer than that.'