The government’s changes to its controversial plans to reform the capital gains tax (cgt) have been welcomed by the Association of Convenience Stores (ACS). The policy u-turn was revealed this week when the chancellor, Alistair Darling, outlined revisions to plans previously announced in last year’s Pre-Budget Report.
At the time of the Pre-Budget report, Darling had stated that a flat rate of cgt would be introduced at 18%. This was met with anger by groups such as the ACS because it abolished taper relief – which reduces the CGT rate the longer assets are held. It also threatened to leave many small business owners in the UK facing massive tax rises from April this year.
But following pressure from groups such as the ACS, Darling yesterday outlined revisions to the plans, deciding instead to give entrepreneurs a 10% rate on profits on the first £1 million made in a business sale.
ACS Chief Executive, James Lowman, said: “We are pleased that these revisions have been made as it shows that the chancellor is listening to and considering small businesses when making important decisions that directly affect the c-store sector.”
However, while the Retail Motor Industry Federation (RMIF) agreed the move would be beneficial for small businesses, it was more critical of the government. RMIF chairman Alec Murray warned it would still cause some pain for traders where long-term investment has been a priority – because the government had delayed announcing the decision.
Murray added: “Why has the government allowed confusion over the issue to continue for so long? This has been damaging to businesses, and therefore bad for the economy. Small businesses are crucial to the health of the UK economy. It is this sector that drives growth, and without entrepreneurs investing in new businesses, the UK economy will grind to a halt.”