CGT named as "key area" for small businesses

The anticipated changes to capital gains tax (CGT) will form the most important part of next month's Budget for small businesses in the UK, an industry group has stated.

According to the Chartered Institute of Taxation (CIOT), CGT reform will be the "key area" for small firms in Alistair Darling's Budget, with taper relief set to be abolished and a flat rate of 18 per cent brought in.

CIOT vice president Andrew Hubbard said that the new CGT system could be "good news for some and bad news for others", with uncertainty about the impact of the so-called entrepreneurs' relief remaining.

He commented: "The small print of how entrepreneurs' relief is going to work has not been released.

"The institute does welcome entrepreneurs' relief - we're just frustrated that we don't know all the rules yet."

Devised by the chancellor under pressure from small business organisations last month, entrepreneurs' relief means that the first £1 million of capital gains will be taxed at ten per cent, rather than the new rate of 18 per cent.