CGT announcement a ‘slap in the face’

24/01/08 16:17

The chancellor’s £1m capital gains tax (CGT) concession is a ‘slap in the face for real entrepreneurs’, the business community claimed today.

After months of deliberation Alistair Darling finally revealed his decision on the new legislation regarding the 18% CGT flat rate, which was announced last year to a chorus of protests from the entrepreneurial community.

Darling said the new relief would allow a 10% tax rate for up to the first £1m of lifetime capital gains, and entreprenuers and investors would be ‘able to claim relief for gains made on multiple occasions up to a cumulative total of £1m’.

However, Duncan Cheatle, founder of entrepreneurs’ network the Supper Club, told Crimson Business the decision was a ‘complete disaster and a slap in the face for the real entrepreneurs’.

He added: “It’s essentially a retirement reward for those with no aspiration to drive the economy and create jobs. Those looking to grow fast and already pay loads of tax now have no incentive to go and do it again.”

Shadow minister for enterprise, Mark Prisk MP, was also quick to criticise the chancellor’s announcement, saying:

"After 15 weeks of dithering and delay, only the smallest firms will be spared. Entrepreneurs will still lose £700m while larger, growing firms have been completely ignored.

“The chancellor is sending a negative message to ambitious entrepreneurs and their investors. They will now wonder what place they have in Brown’s Britain.”

Andrew Jupp, national head of tax at Tenon, said there had already been a number of people selling their businesses quickly in a bid to avoid the increased rate, which comes into effect from April.

He warned that a ‘further flurry of activity in the next couple of months’ was now likely.

Neil Pamplin, tax advisor to g2i, a government-backed investment programme, said the new 18% rate was ‘comparable rather than competitive’ against the average in Europe, which stands at 15-20%.

He added: “The whole issue of CGT reform has been very poorly handled and the government has been on the back foot ever since the original proposals were announced.”