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Capital gains move to be unveiled | Capital gains move to be unveiled |
(20 minutes later) | |
The government is due to unveil details of its proposed changes to Capital Gains Tax (CGT), amid reports of concessions after business criticism. | The government is due to unveil details of its proposed changes to Capital Gains Tax (CGT), amid reports of concessions after business criticism. |
Business leaders had said they did not expect ministers to reverse plans to scrap CGT taper relief from 1 April 2008 and apply a new single 18% band. | |
But press reports say the rate will be halved to 9% on gains of up to £750,000 on the buying and selling of assets. | But press reports say the rate will be halved to 9% on gains of up to £750,000 on the buying and selling of assets. |
The plans have enraged small business owners who would be worst affected. | The plans have enraged small business owners who would be worst affected. |
At recent talks with business leaders, ministers were quoted as saying the 10% rate would still go up to 18% this April. | At recent talks with business leaders, ministers were quoted as saying the 10% rate would still go up to 18% this April. |
Taper relief currently allows some higher rate taxpayers to pay as little as 10% CGT on profits from the sale of assets in any unlisted company or publicly-listed firm they work for, as long as they have held them for two years. | Taper relief currently allows some higher rate taxpayers to pay as little as 10% CGT on profits from the sale of assets in any unlisted company or publicly-listed firm they work for, as long as they have held them for two years. |
It can also reduce the CGT liability for some basic rate taxpayers to 5%. | It can also reduce the CGT liability for some basic rate taxpayers to 5%. |
'Deeply disappointed' | 'Deeply disappointed' |
Miles Templeman, director general of the Institute of Directors said: "It is clear that the government is not going to change the core of its proposals to modify capital gains tax. We are going to see a single rate, with no taper relief. | |
"We are deeply disappointed but not surprised. The government's stance implies that there will still be a substantial tax increase which is bound to damage business." | "We are deeply disappointed but not surprised. The government's stance implies that there will still be a substantial tax increase which is bound to damage business." |
The proposed changes to capital gains tax were announced by Chancellor Alistair Darling in his pre-Budget report last October. | The proposed changes to capital gains tax were announced by Chancellor Alistair Darling in his pre-Budget report last October. |
The changes would mean private equity bosses, who have made fortunes from buying and selling companies, will no longer be able to pay just 10% on their profits. | |
But critics said it also meant budding entrepreneurs could be put off, while existing small business owners described the changes as "potentially ruinous". | But critics said it also meant budding entrepreneurs could be put off, while existing small business owners described the changes as "potentially ruinous". |