CGT reforms 'could create false stock market'

Date: 18th January 2008

The government's delay in clarifying changes to capital gains tax (CGT) has led to fears that the sudden sell-off of shares will create a false AIM market.

Stockbroker group Brewin Dolphin said that share prices will be artificially reduced if Alistair Darling goes ahead with his plan to increase CGT rates from ten per cent to 18 per cent, the Daily Telegraph reports.

The chancellor has yet to finalise the reforms, which were first mooted in his pre-Budget report last autumn, although he has recently come under increasing pressure from small business leaders over the issue.

A spokesperson for Brewin Dolphin said: "If he confirms the changes, there will be a massive sell-off. AIM is illiquid and we feel there is a danger that this will concertina up into a very short period.

"It would be creating a false market as people sell out purely for tax reasons."

Launched in 1995, AIM (Alternative Investment Market) is a sub-section of the London Stock Exchange which allows smaller businesses to float their shares.