Business backlash prompts capital gains tax ‘retirement relief’ rule

31 October 2007
Mr Darling appears to have responded to pressure from UK businesses concerning capital gains tax, and this could help brighten the mood during Small Business Week, which runs from October 29 to November 2.

The Government is still to implement the single 18 per cent rate, which it believes is the best way to “simplify” the capital gains system, as planned and taper relief, which Gordon Brown himself introduced, will also be scrapped as announced in the chancellor’s pre-budget report.

But, the latest reports show that the Treasury is taking concerns, including those voiced by the National Farmers’ Union on October 30, into account. A letter from the CBI, IoD, BCC and FSB may also have provoked a reaction from ministers.

A new measure offering small business owners who retire and sell businesses £100,000 in tax relief is to be introduced in an attempt to ease the burden on those affected. As a result, those who were anticipating an almost 80 per cent tax increase on assets as they prepared to enter retirement should feel a sense of relief.

However, those who are not ready to retire have not, as yet, been offered any concessions. Reports indicate that tax breaks may currently be under consideration in order to promote investment and new business development, but no fixed plans have yet been unveiled.

Expressing his disappointment, director general of UK manufacturers' organisation EEF, Martin Temple, says: "Having gone through a period of beneficial changes, over the last twelve months policy has appeared to go in a different direction, especially towards small and medium size companies which are the lifeblood of our economy.”

Furthermore, it is not yet clear how Mr Darling will make up lost earnings resulting from the ‘retirement relief’ concession.

Find out more about capital gains tax and taper relief

© Fair Investment Company