News

The government has reacted to business concerns over proposed changes to capital gains tax by announcing an "entrepreneurs' relief" rate of 10% on gains of up to £1m.

Chancellor Alistair Darling today (24 January) confirmed, however, that the single rate of 18% and the end of taper relief, announced in October's pre-Budget report, would come into force from April.

The Federation of Small Businessess (FSB), which had proposed a rate of 9% on the first £750,000 of gain, has welcomed the news, but said the handling of the issue had "eroded small businesses' trust in the government".

FSB national chairman John Wright said: "[The proposals] will go some way to protecting entrepreneurship in the UK as well as benefiting small business owners planning to pay for their retirement with the sale of their business."

Wright said, however, that the "huge uncertainties" surrounding tax liabilities had made planning for the future very difficult.

"Even now, small business owners have very little time to prepare before these changes come in."

Darling said today's changes maintained the government's policy of "keeping the tax system as simple as possible".

He said: "We believe our proposals were right then [in October] and are right now. We need to do more to help small businesses, in particular, who will benefit from the entrepreneur relief."