Entrepreneurs considering selling their businesses over the next year are breathing a sigh of relief today as the chancellor, Alistair Darling, held back from lifting capital gains tax rates in today’s Pre-Budget Report.
Expectations in many quarters were that the chancellor would raise the capital gains tax rate to between 20 – 30 per cent, in a bid to shore up public finances and align the CGT rate more closely with the new 50% upper level of income tax.
In our view, the decision to keep the CGT rate at 18% was certainly the right decision, as a rise in the rate would have a very negative effect on investment in general in this country, affecting the risk sentiment of that very important sector of our economy – entrepreneurs. The 10% Entrepreneurs’ Relief also remains in place.
The government announced its intention to extend the Enterprise Finance Guarantee scheme, which has helped around 6000 businesses receive commercial loan funding so far. The extension should guarantee another half a billion pounds of loans to be granted to small UK companies.
It is also encouraging to see that empty property relief has been extended, which should help many smaller businesses escape business rates on their empty properties where the rateable value is below £18,000.