Business groups oppose capital gains reforms

News Article - 22 May 2012
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British business leaders are lobbying the chancellor to go back on the capital gains tax reforms he announced in his pre-budget report last week.

Alistair Darling announced an end to ten per cent taper relief on capital gains tax and said it would be replaced with a flat rate of 18 per cent, regardless of how long an asset has been held for.

The CBI, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors have written a letter to Mr Darling opposing the proposals and urging him to suspend them while a detailed discussion can be had with business.

They argue that the policy change, which they believe came as a "bolt from the blue", will discourage long-term investment and lead to a reduction in investment in start-up and growing businesses by hitting the investments of their owners.

The letter reads: "The impact of the decision will be felt throughout the economy. The net effect will be to set back the growth of the economy over coming years, by discouraging longer-term investment and risk-taking."

Not all of the Chancellor's pre-budget measures have been opposed by business leaders. The CBI welcomed announcements on transport investment as well as the commitment to tax simplification.

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