Darling won’t budge on capital gains tax

Oct 23 2007 by Iain Laing, The Journal

BUSINESS leaders failed to secure a U-turn on changes to capital gains tax in an hour-long meeting with Chancellor Alistair Darling yesterday.

CBI director general Richard Lambert said talks had been positive and he hailed agreement from the Treasury to look at ways to encourage entrepreneurs.

But Mr Darling is understood to have made clear the Government would press ahead with the move, despite claims it could undermine enterprise.

The meeting was convened in response to an open letter from four business bodies warning against the abolition of taper relief.

The CBI, British Chambers of Commerce, Institute of Directors and Federation of Small Businesses argued that the change, announced in Mr Darling’s Pre-Budget Report, would hit small businesses and entrepreneurs rather than the private equity firms it was designed to target.

Under the new regime, to start in April, an 18% flat rate for capital gains tax will be levied on profits from sales of assets, in place of the current sliding scale which can see entrepreneurs pay as little as 10%. Emerging from talks at the Treasury, Mr Lambert said: “We explained to the Chancellor in forceful terms that our members feel very, very strongly about this.

“He agreed to work with us on ways to stimulate the economic environment, the entrepreneurial environment. He agreed to listen to our ideas for a way forward on capital gains tax.”

A Treasury source confirmed the Chancellor had agreed to work with the four groups to improve the business environment and continue to encourage entrepreneurship.