Brown, Darling cave in over CGT proposal

Prime minister Gordon Brown and chancellor Alistair Darling are
reportedly
about to bow to fierce opposition from employer groups against proposed changes
of the capital gains tax (CGT) with an offer to revive retirement tax relief for
small business owners, possibly for amounts up to ?100,000.

The turnaround comes one day after the chancellor met with the heads of yet
another employer group,
EEF,
representing engineering manufacturers, who argued the proposed changes to the
CGT would be damaging for enterprises by rewarding investment in non-business
assets and sent ‘a negative signal at a time when the investment climate,
especially for small firms, is set to become more difficult’.

Business owners, who are about to retire and who would be particularly hard
hit by the proposed CGT changes, are likely to receive a tax exemption, possibly
on the first £100,000 they make, from the sale of their business.

The Treasury is said to still be working out the level, but government
sources have told
The
Daily Telegraph the threshold would run into ‘tens of thousands’ and could
be close to a £100,000 limit. Under the old retirement relief fund, which was
phased out when new CGT levels were introduced by Labour in 1998, the first
£250,000 of a capital gain was tax free, but anything after that was taxed at
40%.

Further reading:

E&Y pans Darling’s CGT explanation

Darling seen to soften stance on CGT changes