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Changes to capital gains tax and the abolition of taper reliefBackground and overview Discussions with Chancellor Press releases Podcasts and speeches Contact us Background and overviewThe CBI believes that the abolition of taper relief in the Chancellor's Pre-Budget Report provides for some simplification of the capital gains tax regime, but at the cost of hitting a number of groups who are taking significant risks in investing in and building the businesses that generate so much of our employment and wealth. In addition to those small business owners who have expended a good deal of 'sweat equity' – foregoing income and putting their homes on the line in order to build up their business – these changes will hit other investors, from external venture capital to employees who take a stake in their company’s future.The changes may have been designed to tackle a perceived problem relating to a few wealthy individuals operating in private equity. But by removing taper relief, the government has deployed an extremely blunt instrument that will deeply damage a much wider community, and in so doing, will risk the medium-term health of our economy. As part of our work following up the Pre-Budget Report and Comprehensive Spending Review, the CBI has made available its analysis to the House of Commons Treasury Select Committee, which is tasked with assessing and reporting on the Chancellor’s policy package. Discussions with chancellorOn 22 October, CBI director-general Richard Lambert joined the heads of the British Chambers of Commerce, Institute of Directors the Federation of Small Businesses to meet chancellor Alistair Darling and discuss business concerns. The chancellor agreed to work with the CBI to develop measures to stimulate enterprise in the UK, as well as proposals for a way forward on Capital Gains Tax.On 8 November, the CBI met with Treasury officials to set out alternative reforms. Since then, the CBI has had several discussions with the chancellor and officials, and these continue. The chancellor said he would announce new proposals in early 2008. These were announced on 22 January. Our reaction can be found in the press release links below. Press releasesDarling imposes £700m raid on investors and savers at exactly wrong time for economy - CBI chief (22 Jan 2008)Chancellor needs to get on with capital gains tax decision - CBI chief (13 Dec 2007) Capital gains tax changes will deter investment and damage enterprise culture, new survey shows (25 Nov 2007) CBI sets out capital gains tax alternatives to Prime Minsiter and Chancellor (8 Nov 2007) CBI comment on reports Chancellor is watering down changes to capital gains tax (1 Nov 2007) Business leaders take capital gains tax concerns to Chancellor (22 Oct 2007) Chancellor invites business groups to discuss abolition of capital gains tax taper relief (22 Oct 2007) Business groups unite to urge Chancellor to suspend abolition of capital gains tax relief (15 Oct 2007) Chancellor's capital gains tax move 'undermines enterprise' - CBI Director-General's open letter to Alistair Darling (11 Oct 2007) Chancellor's statement a 'mixed bag for business' - capital gains tax change will hit small businesses (9 Oct 2007) Podcasts and speechesRead CBI President Martin Broughton's speech to the CBI London Annual Lunch (PDF 108kb)Richard Lambert tells BBC Radio 4's Today programme that new solutions need to be proposed now (16 January 2008). CBI Deputy Director-General John Cridland explains why the Chancellor's announced changes to capital gains tax have been denounced by business leaders and the unions as crippling for enterprise on BBC Radio 4's Today programme (12 October 2007) and on Radio 5 Live's Weekend Business (5.09mb) (14 October 2007). These sound files should automatically open in your media player. If you have difficulties with opening the Radio 4 file, go to the BBC Today programme audio help page. If you have difficulties opening the Radio 5 Live file, copy and paste the link: http://www.cbi.org.uk/podcasts/johncridland141007.mp3 into your media player. Contact usFor more information, or to share your experiences, call Rosa Tormo in the CBI's Taxation Policy Department on 020 7395 8116 or email rosa.tormo@cbi.org.uk.Click here to go to the Policy Work page. |
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