The government has announced changes to capital gains tax (CGT), confirming that it will set a single 18% rate and cease taper relief from April 1.
The government has announced changes to capital gains tax (CGT), confirming that it will set a single 18% rate and cease taper relief from 1 April.
But Chancellor Alistair Darling also said there would be a 10% rate on gains of up to £1m, to help entrepreneurs.
But Chancellor Alistair Darling also said there would be a 10% rate on gains of up to £1m, to help entrepreneurs.
Plans for a single tax rate sparked strong criticism from industry groups and small firms who said it would hamper new businesses.
Plans for a single tax rate sparked strong criticism from industry groups and small firms who said it would hamper new businesses.
The Chancellor first announced changes to CGT in October's pre-Budget report.
The chancellor first announced changes to CGT in October's pre-Budget report.
'Entrepreneurial activity'
"I am today announcing the introduction of a new capital gains tax entrepreneurs' relief," said Mr Darling, as he announced the statement in Parliament.
Plans to raise the rate previously met with fierce criticism from the Institute of Directors, the CBI and the Federation of Small Businesses.
There had been speculation that the government would halve the proposed rate to 9% for gains of up to £750,000.
Small business owners, especially those who had hoped to sell their firms and use the proceeds in retirement, have been especially annoyed.
Mr Darling said about 80,000 people would able to benefit from the relief, which he valued at £200m annually.
The Federation of Small Businesses told the BBC that the "whole episode has been a mess".
Small business anger
'Deeply disappointed'
The original plans to raise the rate had met with fierce criticism from the Institute of Directors, the CBI and the Federation of Small Businesses.
CAPITAL GAINS TAX Tax rate of 18% on sales of assets above £1mTax rate of 10% on sales of assets up to £1mAround 80,000 people expected to qualify for 10% rate reliefLower rate estimated to save firms £200m a year
Small business owners, especially those who had hoped to sell their firms and use the proceeds in retirement, had been especially annoyed.
Before Mr Darling's announcement, the Federation of Small Businesses told the BBC that the "whole episode has been a mess".
But speaking on Thursday, Mr Darling said the new measures would benefit the owners of small businesses when they wanted to sell their firms.
Mr Darling came under fire from Shadow Chancellor George Osborne after the amendments to CGT were announced.
"In the short, inglorious time you've been in office, you've only had one original idea on tax and that was a big increase in capital gains, thinly disguised as a simplification," Mr Osborne said.
Uncertainty
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%.
Firms have criticised Mr Darling for failing to reach a decision on CGT earlier, saying this has added to uncertainty and made financial planning hard.
Firms had criticised Mr Darling for failing to reach a decision on CGT earlier, saying this had added to uncertainty and made financial planning hard.
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.
The changes would mean private equity bosses, some of whom have made fortunes from buying and selling companies, would no longer be able to pay just 10% on their profits.
But critics said it also meant budding entrepreneurs could be put off.
But critics said it also meant budding entrepreneurs could be put off.
Are you a small business owner? What do you think of these changes? Send us your comments using the form below:
Are you a small business owner? What do you think of these changes? Send us your comments using the form below:
