CGT U-turn confirmed

by Catherine Woods - Thursday, 24th January 2008 -

The government has partly backed down from its contentious capital gains tax reforms, announcing that entrepreneurs will pay 10 per cent tax for the first £1m of qualifying gains.

Gains in excess of £1m will be taxed at 18 per cent. Taper relief will still be abolished from April.

Chancellor of the Exchequer Alistair Darling says: “Entrepreneurs will keep 90 percent of the first £1m of gains they make.”

He stresses the introduction of the CGT entrepreneurs’ relief will “complement the new regime”, noting that the measures will benefit business owners who want to sell but also business angels and other investors.

“I’m determined that we do as much as possible to encourage entrepreneurship in
this country,” Darling says, adding that the government will seek to do more for entrepreneurs in future budgets.

Darling caused a storm in the business community last October when he announced
in the pre-budget report that the CGT taper relief will be replaced by one rate of 18
per cent.

Entrepreneurs claimed the move was a slap in the face, and warned that it may encourage many business owners to relocate to other countries.