The Government is expected to announce several changes to the proposed capital gains tax (CGT) reforms unveiled in Alistair Darling's pre-budget report this week. However, these concessions may not be enough to satisfy businesses.
Following widespread animosity from the business sector, the Chancellor will outline new concessions at the House of Commons. Representative bodies such as the CBI, IoD, BCC and FSB have been campaigning against the Government's decision to abolish taper relief and introduce a flat CGT rate of 18 per cent since the reforms were announced in October.
Business owners approaching retirement age are likely to be told they will be entitled to retirement relief, while other changes may include reinvestment relief for those who wish to continue setting up businesses. This could help to encourage reinvestment in the UK.
Despite this, the alterations are unlikely to silence critics of the CGT reforms, as most campaigners have been calling for a complete u-turn on the controversial legislation. Many believe entrepreneurship will suffer if the single tax rate is introduced in April, with some considering selling businesses prior to the cut-off date and others pondering an overseas move to a cheaper tax economy.
Suggestions from the business community include a 50 per cent tax relief on business assets worth £750,000 or under, a measure that would be particularly beneficial for smaller companies. However, there is no evidence that this change will be implemented.
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