Capital Gains Tax reform
24th January 2008
The Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, made a statement to the House of Commons today on Capital Gains Tax Reform. He announced the introduction of a new capital gains tax entrepreneurs’ relief, to complement the new regime which he set out at the Pre-Budget Report last year. A press release issued by the Treasury explains the relief in more detail
:
“Entrepreneurs’ relief will be targeted on the owners of small businesses, and will apply when they sell their business. The relief will also be available to all employees and company directors who invest a material stake in a qualifying company. It will take effect from 6 April 2008 alongside the rest of the capital gains tax reform package.
“The relief will deliver a 10 per cent tax rate for up to the first £1 million of lifetime capital gains. Individuals will be able to claim relief for gains made on multiple occasions up to a cumulative total of £1 million. Gains in excess of the £1 million lifetime limit will attract the standard 18 per cent rate of tax.”
In the Notes to the release, it is stated:
“2. The entrepreneurs’ relief will apply to gains arising on disposals of trading businesses and to gains arising on certain disposals of shares in trading companies.
“3. An investor will have a material stake in a company if they are an employee, company director or other officer of the company, they own at least 5% of the shares in the company, and they are able to exercise at least 5% of the voting rights in the company.
“5. The Exchequer cost of the entrepreneurs’ relief is estimated at around £200 million a year. The measure will be formally recorded in the 2008 Budget Report.”
Links: The statement can be found here and the press release here.
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