Chancellor's pre-budget report heralds fiscal changes affecting the Private Equity industry

The Chancellor’s pre-budget speech in November announced a number of changes pertinent to private equity transactions. One of the principle measures will take effect with regards to capital gains tax. Taper relief will be introduced in order to reduce the amount of a tax charged on the disposal of an asset by an individual or a trust. Effective from the 6th April 2002, the rate of tax payable on business assets will be reduced, for a higher rate taxpayer, to 20% after an asset has been held for one year and to 10% after two years. This is a development on a similar measure introduced in April this year whereby the rate of tax on business assets payable was set to reduce progressively over a four-year period from 40% to 10%.

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