Finance Bill 2000: Government signals U-turn over capital gains tax

The government is considering a U-turn over capital gains tax rules disallowing the investments of employees with shares in some major trading groups from business asset tapering relief, write our parliamentary staff. Economic secretary, Melanie Johnson, promised to consider the position of employees in groups like GKN who would otherwise fall foul of provisions making their company shares liable to less generous rules than those for private holdings. This is because their employers do not qualify as ‘trading companies’ under the rules. But she warned MPs she could not give an undertaking to act before the Bill becomes law later this summer. Johnson was replying to a Tory amendment to qualify the staff of large established groups that may be less than 51% owned whose position shifts between being wholly owned and 40% owned. The move was backed by Liberal Democrats Andrew Stunnell, who complained the rules would disqualify the employees of GKN-owned Westland Helicopters which had become involved in European defence groupings in pursuit of other government policy encouraging consolidation of defence-related industries. He said: ‘It would appear perverse to the company and its employees if following that policy by entering into joint ventures and partnerships and taking a leading role in consolidating put the employees at a disadvantage.’ Shadow chief secretary and accountant MP David Heathcoat-Amory said the point about Westland had become extremely urgent because GKN was negotiating a 50 percent partnership with Augusta owners Finmeccania which would add a further twist to complications disqualifying GKN as a trading company. More Finance Bill stories www.accountancyage.com/tax www.gkn-whl.co.uk.