A small-business lobby group has commissioned the man who came up with the taper relief system to draft feasible alternatives to the chancellor’s proposals to abolish it.
The Federation of Small Businesses (FSB) has asked Ernst & Young's Chris Sanger, the original architect of the capital gains tax taper relief scheme, to counter chancellor Alistair Darling’s plans to scrap it with more entrepreneur-friendly alternatives.
A report has now been submitted to the Treasury, amid expectations that Darling will make a statement regarding CGT next week.
The FSB argued that the abolition of CGT taper relief, which will effectively increase taxes for those looking to sell business assets by 80% after April 2008, will damage the UK’s entrepreneurial culture.
Instead, the organisation has called for the introduction of a new Entrepreneurs’ Relief, which would be applicable to owner-managers of small firms and business angels.
Under these proposals, a 50% relief on capital gains would apply up to a limit of £750,000, which effectively equates to a tax rate of 9%.
The report argued that this system would also achieve the chancellor's aim of a simplified capital gains tax regime, which encourages serial entrepreneurship and long-term investment.
John Wright, FSB national chairman, said: “We’re pleased the chancellor has acknowledged the outrage in the small business community about the plans to abolish taper relief on CGT and welcome the opportunity to put forward some alternatives.
“Our proposals, produced in consultation with the UK’s leading expert on CGT, would protect small business owners that have worked hard over many years to build up a business and want to sell it to pay for their retirement. They would also ensure that the investment in new business ideas that underpins the future of the UK economy could be maintained.”
© Crimson Business Ltd. 2007
