Darling changes CGT proposals

Chancellor of the Exchequer Alistair Darling has backed down from his November Pre-Budget Report plan to enforce a single 18% tax on capital gains. The Chancellor has announced today that while he was going to go ahead with the scrapping of taper relief (which gives tax incentives to hold assets for longer), he will halve the 18% rate on gains below a £750,000 threshold. This concession will benefit smaller businesses and entrepreneurs but is not advantageous for private equity. The changes are due to come into effect on 6 April. Until then, capital gains will be taxed at 10% conditional upon the period of ownership.

Simon Walker, chief executive of the BVCA said: "The announcement by the Chancellor changes very little for our industry. While it provides an important relief for small businesses, it does not address the question of how to encourage serial entrepreneurship, which is at the heart of business growth and development. The rate of 18% remains and this does make the UK less competitive than it was a year ago. What is most important for business, especially as we enter a more challenging economic time, is certainty and predictability. We hope that the announcement settles the period of instability we have been through."

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