Business leaders visit Darling over CGT
Representatives of the UK’s major business groups are visiting chancellor Alistair Darling today over their opposition to changes to capital gains tax (CGT).
In the pre-Budget report Mr Darling announced an end to CGT taper relief at ten per cent for those selling assets of a business they work for, which was first introduced by then-chancellor Gordon Brown in 1998.
Under the plans higher rates for CGT will also be removed with all paying a flat 18 per cent on capital gains.
Groups such as the CBI and the Federation of Small Businesses (FSB) claim the changes will act as a disincentive for investment in small firms – as those looking to sell-up after investing and building up a business now face higher taxation.
However, the chancellor of the exchequer has put the changes in place to stop private equity bosses paying only ten per cent tax on their earnings.
After a joint letter to the chancellor of the exchequer was sent last week explaining disquiet about CGT changes, the director generals of the CBI, Institute of Directors and the British Chambers of Commerce along with the chairman of the FSB, were all invited to Number 11 Downing Street.
Richard Lambert, director-general of the CBI, said: “We look forward to a constructive meeting with the chancellor to discuss his changes to capital gains tax which have caused real concern amongst the business community.”
The letter sent to the chancellor last week said the end of taper relief would “risk the medium-term health of our economy” and hit those “who are taking significant risks in investing in and building the businesses that generate so much of our employment and wealth”.
Speaking after the meeting, Mr Lambert said: “Each of us set out our deep concerns over the abolition of capital gains tax taper relief, after which the chancellor explained the background to the changes.
“Mr Darling said he would be happy to work with the four business groups to develop measures to stimulate enterprise in the UK, and that he would listen to the group’s proposals for a way forward on capital gains tax.
“We believe the Pre-Budget proposals represent a significant step in the wrong direction for the UK economy, and we will continue to press the case for them to be changed. As things stand, they will hold back vital investment in businesses of all sizes and send out totally the wrong message about the government’s attitude to enterprise.”
