Pressure grows on Government over CGT taper relief changes

The Treasury Select Committee has joined millions of small business owners in criticising the Chancellor's Pre-Budget Report which included plans to abolish Capital Gains Tax taper relief.

The Committee criticised the lack of consultation which took place prior to the CGT announcement and also called on the Government to outline how it proposes to mitigate the effects of the changes, particularly how the withdrawal of taper relief will affect small businesses.

All the key business organisations have called for the Government to back down on the proposed implementation of a flat rate 18% CGT regime, including the Federation of Small Businesses.

The FSB's National Chairman, John Wright, said yesterday:

“The Treasury Select Committee has today confirmed what everybody already knew: that the proposed changes to CGT were ill-thought through, ruinous for small businesses and damaging to the UK economy."

“The Chancellor must now clarify the process for consultation that he should have carried out before the Pre-Budget Report."

“Small business owners, particularly those considering selling their businesses to pay for their retirement, need to know where they stand so they can plan ahead.”

Given the scale of resistance to the CGT proposals, the Government does seem to be taking notice. In a speech to the CBI Annual Conference yesterday, Gordon Brown said:

"...we will continue to listen and discuss with you the representations we have received about capital gains tax, ensuring that we maintain reforms for a fairer and simplified system that rewards enterprise. "

We wait for the next developments with interest, and will report them right away on Bytestart.