| In the Pre-Budget Report in
October 2007 the Chancellor, Alistair Darling,
announced a series of changes to the capital
gains tax (CGT) regime for individuals and
trustees. These changes included the abolition
of taper relief and indexation relief and the
introduction of a single rate of CGT of 18%.
The changes take effect from 6 April 2008.
On 24 January 2008, in response to pressure
from the business community, the Chancellor
announced a new ‘Entrepreneurs’ Relief’. The
first £1m of gains qualifying for relief will
be charged at an effective rate of 10%.
Gains in excess of £1m will be charged at
18%. An individual will be able to make more
than one claim for relief, up to a lifetime
total of £1m of gains.
Business leaders had been calling for the
re-introduction of a form of Retirement
Relief, which some of you may remember. The
rules for retirement relief required you to
have been in business for a number of years
but the new rules are designed to be simpler:
- there will be no minimum age limit, and
- relief will be available where the
relevant conditions are met for a period of
one year.
The relief will apply to gains arising on
the disposal of:
- the whole, or part, of a trading
business that is carried on by the
individual, either alone or in partnership,
and
- shares in a trading company, or holding
company of a trading group, provided that
the individual owns broadly a 5%
shareholding and has been an officer or
employee of the company.
Commenting on the announcement Richard
Lambert, Director General of the CBI, said:
‘This is superficially quite clever and on
the surface might seem like a relief after
three months of uncertainty, but even the
smallest business owner will lose taper relief
and indexation and be worse off.
The reality is that these revised measures
will do nothing to help the real business
powerhouses of this country. Although £1
million might sound a lot, it could have been
built up over twenty or thirty years. It is
clear that the real wealth and job creators of
the UK's economy, selling assets for a lot
more, will be seriously clobbered.
Today's changes still discriminate against the
long-term holding of assets, in favour of
short-termism, and will do nothing to restore
stability to the life insurance market, which
faces a period of turmoil.’
Please do get in touch if you have any
immediate concerns. We will let you have
further detail once this is available.
Internet link:
HMRC guidance and
CBI Press release |
