Chancellor 'U-turns' on Capital Gains
Posted on 25 January 2008 by
The chancellor has performed a U-turn on his plans to change capital gains tax (CGT), according to the Conservatives.
However, small business groups have reacted positively to the revised plans announced yesterday by Alistair Darling, with the Federation of Small Businesses (FSB) 'welcoming' them.
CGT is a personal tax levied on the profits made from selling assets, such as buildings, companies or investments. In October 2007, Mr Darling announced that he would scrap tapered relief on CGT, replacing it with an 18% flat-rate. Business lobby groups reacted angrily, claiming that the proposed changes would greatly increase the tax paid by entrepreneurs who were selling their businesses.
Yesterday, the chancellor announced that an 'entrepreneurs' relief' would be extended to those selling a business, allowing them to pay 10% on the first £1 million of profit.
Shadow chancellor George Osborne accused Mr Darling of "dithering and delaying" for four months before "deciding to climb down". He claimed that the changes amounted to a £700 million tax rise "at the very moment when we face the greatest economic difficulties".
FSB national chairman John Wright said that the organisation welcomed entrepreneurs' relief, but added: "The way in which the whole issue has been handled has seriously eroded small businesses' trust in the Government.
"Even now small business owners have very little time to prepare before these new changes come in."
The government has not announced reliefs for individuals selling other assets such as property.
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