FSB offers to clear up Chancellor's CGT mess with "Entrepreneur's Relief" proposal

In advance of the Chancellor's announcement on the status of the CGT taper relief changes, which is expected later this week, the FSB has hired a leading tax expert to come up with more sensible solutions to Alistair Darling's initial Pre-Budget Report proposals.

Chris Sanger, the man behind the original CGT taper relief team, has been commissioned by the business organisation to draft alternatives to the Chancellor's taper relief abolition plans, which could have a devastating effect on the UK's entrepreneurial culture if they go ahead in April 2008.

Entrepreneur's Relief

The FSB has suggested the implementation of a new "Entrepreneur's Relief" which would apply to owner-managers of small businesses as well as business angels.

These proposals would:

• Provide a 50% relief on capital gains up to a limit of £750,000, which equates to an effective tax rate of 9%
• Make it easy to identify who would qualify for the relief;
• Encourage serial entrepreneurship and prevent entrepreneurs from leaving the UK, which could in turn increase the overall tax take from them; and
• Simplify the capital gains tax system in line with the Chancellor’s intentions.

Following the announcement of the proposals, John Wright, FSB National Chairman, said:

"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.”