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Capital gains move to be unveiled Capital gains move to be unveiled
(about 1 hour later)
The government is due to unveil details of its proposed changes to capital gains tax, amid widespread reports of concessions after business criticism. The government is due to unveil details of its proposed changes to Capital Gains Tax (CGT), amid reports of concessions after business criticism.
Business leaders had said they did not expect minsters to reverse plans to replace the 10% rate for assets held for at least two years with a flat 18%. Business leaders had said they did not expect minsters to reverse plans to scrap CGT taper relief from 1 April 2008 and apply a new single 18% band.
But press reports say the rate will be halved to 9% on gains of up to £750,000 on the buying and selling of assets.But press reports say the rate will be halved to 9% on gains of up to £750,000 on the buying and selling of assets.
The plans have enraged small business owners who would be worst affected.The plans have enraged small business owners who would be worst affected.
At recent talks with business leaders, ministers were quoted as saying the 10% rate would still go up to 18% this April.At recent talks with business leaders, ministers were quoted as saying the 10% rate would still go up to 18% this April.
Taper relief currently allows some higher rate taxpayers to pay as little as 10% CGT on profits from the sale of assets in any unlisted company or publicly-listed firm they work for, as long as they have held them for two years.
It can also reduce the CGT liability for some basic rate taxpayers to 5%.
'Deeply disappointed''Deeply disappointed'
Institute of Directors director general Miles Templeman said: "It is clear that the government is not going to change the core of its proposals to modify capital gains tax. We are going to see a single rate, with no taper relief.Institute of Directors director general Miles Templeman said: "It is clear that the government is not going to change the core of its proposals to modify capital gains tax. We are going to see a single rate, with no taper relief.
"We are deeply disappointed but not surprised. The government's stance implies that there will still be a substantial tax increase which is bound to damage business.""We are deeply disappointed but not surprised. The government's stance implies that there will still be a substantial tax increase which is bound to damage business."
The proposed changes to capital gains tax were announced by Chancellor Alistair Darling in his pre-Budget report last October.The proposed changes to capital gains tax were announced by Chancellor Alistair Darling in his pre-Budget report last October.
The changes would mean private equity bosses, who have made fortunes from buying and selling companies, will no longer be able to pay just 10% on their vast profits.The changes would mean private equity bosses, who have made fortunes from buying and selling companies, will no longer be able to pay just 10% on their vast profits.
But critics said it also meant budding entrepreneurs could be put off, while existing small business owners described the changes as "potentially ruinous".But critics said it also meant budding entrepreneurs could be put off, while existing small business owners described the changes as "potentially ruinous".