Alistair Darling announced a special 'entrepreneur's relief' on capital gains tax today, offering small businesses a 10% CGT rate on the first £1m of gains.

The move marks a climb down on Darling's original proposal, made in the 2007 pre-Budget report, to introduce a flat 18% CGT rate for all disposals.

The new relief will offer a 10% tax rate for the first £1m of qualifying gains. Gains made on different occasions will qualify for the 10% rate, but only up to a lifetime total of £1m of gains.

Gains in excess of £1m, irrespective of the time period will be taxed at 18%.

The relief will also be offered to investors who dispose of shares in a business, so long as the stake in the business is 5% or more.

The government estimates that the relief will cost the Treasury £200m and that 80,000 small businesses and investors will make disposals eligible for the relief, which comes into force in April.

Further reading:

Read Darling's statement to Parliament on the CGT relief