Chancellor's CGT "relief fund" U-turn blasted by business experts

Following recent newspaper rumours that the Chancellor is set to do a u-turn over the controversial CGT taper relief abolition proposal by being more lenient on "retiring" business owners, the business community has once again laid into the Government over its clumsy handling of the whole affair.

In the pre-budget report, the Chancellor stated that the CGT taper relief regime would be abolished from 6th April 2008 in favour of a single, flat 18% CGT rate on business sales.

This week, the Telegraph and Times (as well as other leading titles) have reported that the Chancellor is going to try to lessen the blow by allowing retiring business owners to benefit from tax relief on the first £100,000 of a future (and final) business sale.

Unfortunately, this "relief fund" is far less generous that the old retirement relief fund which allowed for £250,000 tax free (this was phased out in 1998). Additionally, this possible u-turn does absolutely nothing for non-retiring business owners, who will be subject to 18% CGT on all business sales before they retire.

It will come as little surprise that this latest u-turn has been panned by pretty much everyone in business - here are a few quotes:

Peter Penneycard, Tax Partner at PKF said:

“The latest announcement simply illustrates short-term ‘on the hoof’ setting of tax policy rather than considered policy designed to achieve clear economic objectives. £100,000 may sound like a lot but in terms of retiring from a business, it’s nothing."

"By taking steps to address the relatively minor issue of the taxation of private equity profits – essentially a political move - the Chancellor has angered the business community and hit one of Britain’s key economic strengths – small business entrepreneurship."

Richard Lambert, CBI Director General said:

"Nobody must be under any illusion that this will resolve the issue. There are many other businesses and investors who need help as a result of these ill-thought-out pre-budget changes."

George Osborne, shadow chancellor, said:

"Only three weeks ago, the chancellor announced big tax increases for small businesses and entrepreneurs. Now we hear he has changed his mind. Business needs certainty, not dithering."