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Last Updated: Friday, 14 December 2007, 10:42 GMT
Chancellor's tax delay criticised
Chancellor Alistair Darling
Critics hope the chancellor has given himself time to back-track
The Chancellor Alistair Darling has been criticised for delaying announcing the details of new rules for capital gains tax (CGT).

He had been expected to publish the draft legislation this week.

But he told MPs on Thursday he needed time for more consultation and would make an announcement early in 2008.

Political opponents and business organisations said the delay would cause anxiety ahead of next April when the changes were due to start.

"We are glad that the chancellor is paying attention to the submissions he has received from the business community, but he needs to get on with this decision urgently," said Richard Lambert, director-general of the employers' organisation, the CBI.

"People need to be able to make decisions about their businesses - whether to invest, or whether to sell up. This uncertainty mustn't be allowed to continue," he added.

The shadow chancellor, George Osborne, described the delay as a humiliating U-turn.

"The chancellor told the CBI Conference on the 27 November, 'I expect to publish final proposals in the next three weeks'," he said.

"Everyone knows in the New Year he will be announcing a U-turn forced on him by the business community and his political opponents," claimed Mr Osborne.

'Scant idea'

The Chartered Institute of Taxation (CIOT) said the best thing to do would be to delay introducing any changes to CGT for another year, until April 2009.

16% of SAYE participants could be worse off, that's 272,000 employees, many of whom are relatively low earners
Fiona Downes, ProShare

"The CIOT is deeply concerned that this puts many small businesses and individuals in an extremely difficult position," said Rob Ellerby, president of the CIOT.

"Any entrepreneur considering disposing of their business now has scant idea of the tax implications if the sale is after 5 April 2008," he said.

The chancellor first proposed changing the CGT rules in October's pre-budget report (PBR).

The general effect will be to raise substantially the levels of CGT paid by people selling businesses or shares after 5 April 2008, but to cut CGT for those selling second properties.

ProShare, which campaigns in favour of employees owning shares in their employers, called for the chancellor to make his mind up quickly.

"A significant minority of Save As You Earn (SAYE) employee shareholders could be negatively affected if the Chancellor does not amend his original proposals for CGT reform," said Fiona Downes of ProShare.

"Our research suggests that 16% of SAYE participants could be worse off, that's 272,000 employees, many of whom are relatively low earners," she said.

Delay welcomed

However, the Federation of Small Businesses (FSB) welcomed the delay as an opportunity to persuade the chancellor to alter his plans.

Alistair Darling's continued dithering is just making a bad situation worse
Vince Cable, Liberal Democrat acting leader

John Wright of the FSB said: "We are still no clearer on what will happen with the tax arrangements for millions of small business owners and entrepreneurs come April next year.

"But at least the chancellor appears to be taking our opposition to the PBR and our proposals for changes to it seriously," he added.

But the acting Liberal Democrat leader, Vince Cable, was scathing.

"By failing to properly consult business in the first instance over these reforms, the chancellor showed total ineptitude," he said.

"Alistair Darling's continued dithering is just making a bad situation worse."



SEE ALSO
No gains tax change before 2008
13 Dec 07 |  Business
Cameron attacks tax increase plan
27 Nov 07 |  Business
Capital gains tax moves explained
27 Nov 07 |  Business
Should capital gains tax be reformed?
27 Nov 07 |  Have Your Say
MPs call for tax reform rethink
26 Nov 07 |  UK Politics

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