Chancellor plans climbdown on CGT

by The Editor at 10:04 24/01/08 (News on Business)

Chancellor Alistair Darling is set to announce a significant climbdown over his controversial plans to reform the capital gains tax system.

It is widely reported that the Chancellor will shortly offer a major concession to small business owners and entrepreneurs infuriated by his plans to increase the rate they pay by 80 per cent. He wanted to scrap the lower 10 per cent rate of CGT and replace it with a new flat rate of 18 per cent. Small business pressure groups have been campaigning against the measure since its announcement in the Pre Budget Report and Mr Darling recently signalled he had been listening to them and delayed his final decision by several weeks. Advertisement Now it is believed that he will backdown on his original plans and present new proposals whereby small business owners will have to pay only nine per cent tax on any profits they make up to a cumulative limit of £750,000 throughout their lifetime. Once their profits from business sales go beyond this, they will pay the higher rate. If he goes ahead with this move, there should be a sigh of relief from small businessees but the Treasury is still expected to come under fire from big businesses and entrepreneurs. At the moment, Britons selling businesses pay CGT at 10 per cent if they have owned the company for at least two years. However, Mr Darling announced last October that profits on selling companies would be taxed at a new flat rate of 18 per cent. According to the Financial Times, this would be a 'humiliating climbdown' for the Chancellor. An announcement to MPs is expected later today (Thursday). See also: CGT uncertainty continues for small businesses - Shout99, Dec 2007 Delay on capital gains tax decision - Shout99, Dec 2007 Darling agrees his CGT changes are 'controversial' - Shout99, Nov 2007 Shadow Chancellor joins call for CGT rethink - Shout99, Nov 2007 PBR(5): Capital Gains Tax petition - Shout99, Oct 2007 -- If you wish to comment on this article, please log in and use the Reply button below. Registering is simple and easy to do online - see 'Join Shout99'. -- The Editor

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