Trust in government "eroded" by CGT changes

Many of the UK's small business owners will find it difficult to trust the government after the problems surrounding capital gains tax (CGT) reform, an industry member has claimed.

George Derbyshire, chief executive of the National Federation of Enterprise Agencies, welcomed the chancellor's willingness to modify his original plans for the tax changes as "good news" but suggested that this change of heart may have come slightly too late.

"There is a danger that the small business community might feel its trust in the government has been eroded," he commented.

Referring to Alistair Darling's sudden announcement of his plans for CGT in last October's pre-Budget report and the Treasury's subsequent delay in confirming the reform, Mr Derbyshire stated that "consultation at the outset might have avoided this situation".

Under pressure from small business groups last week, Mr Darling revealed plans for Entrepreneurs' Relief, which allows businesspeople to continue paying just ten per cent tax on capital gains up to the first £1 million.