It looks like the Chancellor is going to have a busy New Year with the Northern Rock crisis and problems over the business community’s opposition to the CGT reforms.
Continuing uncertainty over the scope of the Capital Gains Tax reforms have been exacerbated by the Treasury’s decision to delay any announcement until the New Year. Whilst uncertainty is never a good thing in any market, we feel that more considered reforms are a step in the right direction. It was obvious that the Treasury had not thought through the reforms properly before and if Alistair Darling needs a few more weeks to properly consult on the tax changes and so come to a better decision, then that is no bad thing.
Rumours of delays until April 2009 and more concessions to serial entrepreneurs abound. However, our view is that it is inevitable that generally higher CGT taxes on business will stick. Particularly hard-hit will be smaller companies who also face an increase in corporation tax from 19p to 22p in the pound in 2009.
Not unsurprisingly, the Tories have moved fast to place bold business tax cuts at the top of their election manifesto.