NEWS
RELEASE

"This is superficially quite clever and on the surface might seem like a relief after three months of uncertainty, but even the smallest business owner will lose taper relief and indexation and be worse off than before October.

"The reality is that these revised measures will do nothing to help the real business powerhouses of this country. Although £1 million might sound a lot, it could have been built up over twenty or thirty years. It is clear that the real wealth and job creators of the UK's economy, selling assets for a lot more, will be seriously clobbered.

"Today's changes still discriminate against the long-term holding of assets, in favour of short-termism, and will do nothing to restore stability to the life insurance market, which faces a period of turmoil.

"The bottom line is that the reaction of the UK government, in the face of an economic slowdown, has been to slap on a major tax hike of £700 million. This will have a damaging effect on job creation, investment and savings at exactly the wrong time in the economic cycle.

"This tax hike has been badly handled from start to finish. It was rushed out without consultation and there has been precious little since, despite the interminable wait for these revised plans. To be given ten weeks to make major business decisions is simply not reasonable.

"The relationship between Government and business has been damaged by this affair and will take time and effort to rebuild."

CBI Press Office on 020 7395 8239 or out-of-hours pager 07623 977854.