There is speculation that widespread protest over the controversial changes made to capital gains tax (CGT) announced in Alistair Darling’s pre-budget report may provoke a rethink.
The chancellor has repeatedly defended his reform proposals and has said he will implement the 18 per cent single rate in April as planned. However, in the face of pressure from small businesses and well-known entrepreneurs, there have been subtle hints that taper relief may not be scrapped after all.
He has reasserted that he does not wish to reintroduce “all the complexity” of the existing system, but has recognised that those approaching retirement will be concerned about the rule change.
Mr Darling also said he will talk to businesses “about how we can improve things”. Experts believe minor changes to the rule could be introduced in response to criticism, which has included attacks from labour politician Lord Jones, UK insurance group Aviva and Arcadia owner, Sir Philip Green, as well as criticism from four of the country’s biggest business groups - the CBI, IoD, BCC and FSB.
Asked about the removal of taper relief, Sir Philip told the BBC's Wake Up To Money programme that the Government should have introduced a tax-free ceiling of up to £1 million for new companies. "You need to give people an incentive to bet their own house or use their own money,” he says.
Aviva’s chief executive, Andrew Moss believes the new regulations could lead to a reduction of the company’s life insurance products by between one and two per cent. “It is a key issue with Aviva,” he says.
The Financial Times’ overview of the changes also suggests that Mr Darling rethinks the situation. “The moral for aspiring tax simplifiers: streamline in isolation and you may create more problems than you solve,” it suggests.
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