Member Article

Darling told not to stifle enterprise

The Chancellor risks creating a de-stablising rush of small business sell-offs unless he opts this week to reverse his planned reform of the Capital Gains Tax (CGT), according to the North East Chamber of Commerce. Alistair Darling announced late last year plans to abolish the taper relief on Capital Gains in a bid to simplify a system blamed for allowing private equity firms to pay less in tax than their secretaries.

But the NECC fears the move has sparked a rush by smaller entrepreneurs to offload their companies or face paying almost double the tax rate on the eventual sale price of their businesses.

The move would see a number of company owners forced to make premature decisions before a business had reached its potential under their leadership. The law changes could also see many successful businessmen dissuaded from pursuing new ventures because the potential benefits are outweighed by punitive tax levels.

NECC warned last October that the proposed changes amounted to the third tax hit on businesses since Mr Darling was appointed Chancellor. In total, the trio of tax hikes amounted to an 80% increase in taxation on SMEs.

Andrew Sugden, NECC director of membership and policy, said: “NECC is one of a number of organisations that have sent a loud and clear message about the punitive impact of this tax increase. “We hope Alistair Darling has been listening and that he will pull back from these reforms. “Taken with the increase in corporation tax for small businesses and empty property rates, this is the third tax change in a year which will have major implications for many of our members.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .