Chancellor stands firm on CGT reform

23/10/07 18:06

The chancellor has rejected calls to scrap the planned changes to capital gains tax (CGT) despite an hour-long meeting with representatives from business lobby groups yesterday.

However, Alistair Darling did agree that he would work with business on ways to encourage enterprise in the UK.

Leaders from the British Chambers of Commerce (BCC), the Confederation of British Industry (CBI), the Institute of Directors (IoD) and the Federation of Small Businesses (FSB) met with the chancellor yesterday.

Following the meeting, David Frost, director general of the BCC, said:

“The chancellor can now be in no doubt of the views of business towards the changes he made to CGT in the pre-budget report. [He] has agreed to work with business on measures to stimulate enterprise in the UK and seek ways to find a way forward on the issue of CGT.”

John Wright, FSB national chairman, said the meeting was ‘constructive’ and he hoped there was ‘ scope for a compromise’ to meet the needs of both government and entrepreneurs.

He added: “We will now be presenting more evidence and information to the Treasury to highlight the damaging nature of this potential change to the tax regime for small businesses before next year’s Budget.

“We are hopeful that a successful outcome to this situation can be achieved through meaningful consultation with the Treasury.”

The four business groups sent a joint letter to the chancellor last week in which they said they were ‘deeply concerned’ with the changes to CGT which included the scrapping of taper relief.

A flat rate of 18% is set to be introduced from April 2008, which replaces the old CGT system where taxation ranged from 10-40% depending on the type of business asset held and how long it had been owned.