News

The government appears to have made a U-turn on its plans to reform Capital Gains Tax (CGT).

Three weeks after chancellor Alistair Darling announced controversial plans to introduce a new 18% flat rate for CGT from April 2008 and abolish taper relief, he is reportedly going to soften the blow by giving £100,000 in tax relief for business owners who sell up and retire.

According to The Times today (31 October), Darling is to bring back a system of "retirement relief" for owners of small and medium-sized businesses, which means they will pay far less when they sell up and retire.

The chancellor was accused of stifling innovation and investment when he unveiled his original plan in his Pre-Budget Report on 9 October.

He has since been under sustained pressure from the British Chambers of Commerce, Confederation of British Industry, Federation of Small Businesses and Institute of Directors

Commenting on speculation that Darling had changed his plans, British Chambers of Commerce director general David Frost said the new proposal would go "some way to meeting our concerns" and would help business owners seeking to retire.

"However, there is wider concern that serial entrepreneurs, those that build businesses, will still be hit by the proposal to have a higher single [CGT] rate of 18%. This will damage the entrepreneurial culture in the UK," he said.