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Last Updated: Monday, 22 October 2007, 16:44 GMT 17:44 UK
Darling tax talks 'constructive'
Chancellor Alistair Darling
Alistair Darling has come under fire from big business
Business lobby groups have said that a meeting tackling concerns over changes to the UK capital gains tax (CGST) system had gone well.

After senior figures met Chancellor Alistair Darling, a government source said the talks had been "constructive".

The groups, which included the CBI, argued that the planned changes to the tax would undermine small businesses and stifle entrepreneurship.

CBI chief executive Richard Lambert described the meeting as "positive".

The government plans to make all capital gains be subject to a flat 18% charge.

This replaces a more complex system, in which the rate could vary between 10% and 40%, depending on the type of asset and the length of time it had been held.

Mr Darling argues that the measure will ensure private equity firms pay fairer taxes.


"The chancellor agreed to work with us on ways to stimulate the economic environment, the entrepreneurial environment. He agreed to listen to our ideas for a way forward on capital gains tax," Mr Lambert said.

And director-general of the British Chamber of Commerce (BCC), David Frost, welcomed the talks.

"The chancellor has agreed to work with business on measures to stimulate enterprise in the UK and seek ways to find a way forward on their issue of CGT," Mr Frost said.

The CBI, the Institute of Directors, the BCC and the Federation of Small Businesses said in an open letter to the chancellor last week that they were "deeply concerned" about the proposals.

They added that the proposals, which they described as "a bolt out of the blue", would hurt small businesses and employee share-ownership schemes, as well as discouraging risk-taking by venture capital firms vital to economic growth.

"The impact of the decision will be felt throughout the economy," their letter said.

"The net effect will be to set back the growth of the economy over coming years by discouraging longer-term investment and risk-taking."

"Combined with this week's decision on capital gains tax, our members feel the government's 10-year effort to create a pro-enterprise agenda has been put into reverse gear."

Small business spokesman hits out at the tax proposals

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