Reports of a possible backflip by chancellor Alistair Darling on his proposed changes of the capital gains tax (CGT), offering a ₤100,000 tax relief softener, have received a lukewarm response from the business sector.
‘Nobody must be under any illusion that this will resolve the issue,’ Richard Lambert, CBI director-general, said. ‘There are many other businesses and investors who need help as a result of these ill-thought out pre-budget changes,’
Peter Penneycard, tax partner at accountants and business advisers PKF, said reports of a £100,000 tax relief on CGT for business was ‘a sop to those business interests who damned his abolition of taper relief’ and would do little to offset the damage to business start-ups created by the 18% rate set in the pre budget report.
‘The tax simplification achieved through abolishing taper relief was welcome but, if he truly wanted to foster the entrepreneurial spirit in the UK, the chancellor should have extended the rules around the Enterprise Investment Scheme, to allow owner-managers to invest in their businesses free of CGT. That relief on investment of only up to £7m is currently only open to investors with no involvement in the running of the business,’ he said.
Further reading:
Brown, Darling cave in over CGT proposal
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