SME Business News

Chancellor Alistair Darling has been forced into a U turn over Capital Gains tax for small businesses. Darling has announced that the rate of 18%, that he introduced just 3 months ago, would now be cut to 10%, for the first £1 million of gains on business assets.

The Chancellor told the commons that he would be introducing a new capital gains tax entrepreneurs relief, that will provide the “special” 10% tax rate for the first £1 million of qualifying gains. Gains over  £1 million will still be subject to 18%.

Darling said that ” The measure will benefit the owners of small businesses when they choose to sell their business and it will also benefit business angels and other investors who take a stake of 5% or more in the company concerned.” Adding  that the reforms he had made would allow the business investor/entrepreneur to keep 90% of the first £1 million gains that they make.

The Chancellor expects the changes to affect 80,000 business people, at a cost to the treasury of £200 million a year.

While the news will be  welcomed by many SMEs, it has done little to pacify the louder voices of big business.

Shadow Chancellor George Osbourne reacted to the announcement as a “humiliating retreat” for the Chancellors “one big idea.”