D Day looms for CGT reforms

23 January 2008 / by Verity G
Final decisions on the long awaited CGT reforms are to be announced either tomorrow or early next week after a final consultation between the Treasury and business leaders to be held today.

The UK businesses community will be waiting with baited breath to hear the outcome of what is expected to be a heated debate as Chief Secretary to the Treasury, Andy Burnham meets with industry organisations CBI and Institute of Directors amongst others, to discuss the final concessions to be made to the Capital Gains Tax reforms.

One of the main topics up for discussion is to be the contentious pre-Budget report proposal that forces a single 18 per cent rate of CGT, rather than the original ten per cent for business assets held for a period no less than two years which was initially put forward before being unanimously rejected by the entire business community.

A further attempt to offer relief on £100,000 of profits for business owners who sell up and retire was also heavily criticised, as has Chancellor Alistair Darling's failure to pin down reforms that both the Government and UK businesses can accept.

Now, stockbroker Brewin Dolphin has warned that the lack of concrete concessions to the CGT reforms is threatening to cause a false market in AIM listed shares as sellers continue to hold back until a decision is made.

Speaking to reporters for the Telegraph a spokesman said: "If he confirms the changes, there will be a massive sell-off. AIM is illiquid and we feel there is a danger that this will concertina up into a very short period.

"It would be creating a false market as people sell out purely for tax reasons."

Back in October, the Chancellor first revealed his controversial CGT reforms claiming that, in addition to simplifying the tax system, the 80 per cent increase in the tax rate will raise an extra £900 million for Government coffers

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