Darling confirms capital gains tax reforms

Alistair Darling has told MPs that he will make a tax concession worth £200m as part of his strategy to reform capital gains tax (CGT).

The Chancellor confirmed that he will axe taper relief and impose a flat rate of 18%, but announced plans to develop a new ‘entrepreneurs’ relief’ – a concession the Government hopes will mollify critics from within the business community.

Under the revised rules the 18% flat rate will be reduced to 10% for up to the first £1m of lifetime capital gains made by entrepreneurs and business investors.

This ‘entrepreneurs’ relief’ will apply when small business owners sell their firms, and will be available to all employees and company directors who invest a ‘material stake’ in a qualifying company from 6 April 2008.

‘The UK business environment remains one of the best in the world and I am determined to keep it that way,’ said Darling.

However, following the statement Shadow Chancellor George Osborne criticised the Government’s ‘dithering’ over the issue and claimed that Darling’s controversial plans for CGT had been met with ‘the universal opposition of British business.’

If you would like to discuss the implications the new rules may have for your business, please contact us.