FSB welcomes revisions to capital gains tax plans

The Federation of Small Businesses (FSB) has welcomed the Government’s changes to its plans to reform capital gains tax (CGT).

But the UK’s biggest business organisation warned that small businesses’ trust in the Government has been damaged by the original proposals and the uncertainty over revisions to them.

In last year’s Pre-Budget Report the Chancellor Alistair Darling announced a flat rate of CGT at 18%, abolishing taper relief and leaving many small business owners facing massive tax rises from April this year.

The Chancellor today outlined revisions to those plans, which follow closely the FSB’s proposal for an entrepreneurs’ relief. The FSB called for a 9% rate on the first £750,000 of gain. The Government’s new plan would give entrepreneurs a 10% rate on the first £1 million of gain.

John Wright, FSB National Chairman, said:

“The Chancellor said specifically today that he wanted to help small businesses facing big tax rises from April and that is very good news indeed.

“The entrepreneurs’ relief he announced today is close to the proposals we put forward at the end of last year. They will go some way to protecting entrepreneurship in the UK as well as benefiting small business owners planning to pay for their retirement with the sale of their businesses.

“We welcome these plans, but the way in which the whole issue has been handled has seriously eroded small businesses’ trust in the Government. There has been huge uncertainty about what small businesses’ tax liabilities would be from April 2008 and this has made planning for the future very difficult. Even now small business owners have very little time to prepare before these new changes come in.”

ENDS

Notes to Editors:

1. The FSB’s proposals for changes to the original plans to introduce a flat capital gains tax rate of 18% can be found here: http://www.fsb.org.uk/documentstore/filedetails.asp?id=385.

2. The FSB is Britain’s biggest business organisation with over 210,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155

Simon Briault: 020 7592 8128 / 07917 628998

Belinda Webb: 020 7592 8121 / 07825 125695

For regional FSB contacts please go to www.fsb.org.uk/regions