CBI: CGT changes killing business spirit

CGT

Entrepreneurs are considering selling their businesses before April to avoid
the hike in CGT, a survey has found.

The CBI curvey of business leaders reveals that 41% were considering the
move.

The
survey also reveals proposed changes by chancellor Alistair Darling to the
Capital Gains Tax
(CGT) fail to convince a majority of 63% of respondents they are a ‘desirable
simplification’.

Instead, the proposals are already holding back future business plans – 43%
having changed their plans to invest in new business and 36% now unwilling to
invest in existing business.

The survey revealed 40% of SMEs found the proposed CGT changes already had a
negative impact on their business. This response increased to 57% for business
leaders holding equity in their business for more than 10 years, who accounted
for 61%.

The three main elements of the proposed CGT changes – the abolition of taper
relief, the change in the marginal rate and the abolition of indexation relief –
were regarded as key issues, particularly for those with an equity stake. The
survey showed a sharp spike of concern about taper relief as 85% of those who
said CGT changes were ‘very negative’, cited taper relief as ‘highly important’.

John Cridland, CBI deputy director-general, said the government’s standing
with business had been ‘sorely undermined’. ‘Entrepreneurs are now less inclined
to do what they do best – taking risks, investing in ideas and driving the
economy forward,’ he said.

Further reading:

Business ‘more angry than ever before’ over CGT

Employer groups join forces over CGT

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