The government said it would tax individual entrepreneurs and small business owners at a rate of 10% on capital gains of up to £1 million. Previously it had proposed a blanket capital gains tax of 18%, which had prompted a raft of business and brand owners such as LK Bennett founder Linda Bennett and Peter Werth to attempt sell off their businesses before the new rate was introduced in April.
BSSA chief executive John Dean said: "Following the failure of the government to think through the widespread detrimental implications of their announcement last year regarding changes to the CGT regime, they have, after months of procrastination and lobbying from business organisations, announced some welcome modifications that will undoubtedly help small businesses. We welcome the decision to reduce the rate to 10% on capital gains of up to £1m."
He added: "The outcome is probably the best we could have expected in the light of government determination not to budge from their stance of a single 18% rate. It achieves the government objective of limiting the profits of private equity bosses but at the same time is increasing the tax take in excess of £600m, money which will no longer be invested in the establishment of new businesses. In the long run UK plc will be the loser."