Capital gains tax
Changes delayed until April
Alistair Darling, the chancellor delivered another blow to businesses and shareholder groups by announcing that concessions to ameliorate the impact of changes to the capital gains tax (CGT) regime would be delayed until April this year.
The chancellor had promised an announcement before the end of last year on the results of consultation over the abolition of taper relief on CGT, but was forced to admit the postponement, citing the "wide range" of representations, some "quite complex."
The Treasury said the chancellor intended to press ahead with the reform in April this year, leaving only weeks for any late changes to be digested. The chancellor announced a flat rate 18 per cent CGT in the Pre-Budget Report on October 9 last year, removing taper relief that could be as low as 10 per cent, but quickly accepted modifications would need to be made.
Mr Darling last year assured the CBI employers' at the organisation's conference that he was listening to the vociferous business protests against his Pre-Budget Report decision to implement a single 18 per cent rate of CGT.
The shareholder lobby group IFS ProShare said the changes planned for April would force an extra 13 per cent tax on shares worth more than £9,200, when they are currently only subject to a 5 per cent tax.
The proposed changes would replace the current system where the tax rate on the sale of business assets is reduced the longer it is held, falling to 10 per cent after two years. Employers warned of a further backlash if the final concessions were not significantly broader than the option, already announced but not officially confirmed, of a £100,000 tax relief for people who sell businesses and retire.
Business owners have warned the continued threat of an 80 per cent tax increase from the 10 per cent rate after two years to 18 per cent was distorting the market.
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Levels and bases of, and reliefs from, taxation are subject to change.
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