Positive capital gains tax news for UK entrepreneurs

In an announcement made this morning, David Cameron gave some reassuring, but vague, news for business owners concerning capital gains tax - entrepreneurs will be protected from higher tax rates where the sale of their businesses are concerned.

Mr Cameron said: "We have to raise some modest amounts of revenue in order to raise the income tax threshold, which we think will help in particular lower paid people. But we need a country that really frees up entrepreneurship."

The raising of capital gains tax rates from the existing rate of 18 per cent is primarily designed to affect profits made on the sale of non-business assets, including second homes and shares.

The news follows weeks of uncertainty since the election, though the new prime minister made it clear that no more details will be disclosed until the Emergency Budget on 22 June.

Entrepreneurs, like everyone else, will have to wait until June to find out who qualifies for a higher rate of CGT, what that rate will be, and when the tax legislation will come into force.

Currently, those who own at least five per cent of a business qualify for a CGT rate of just ten per cent of their gains upon sale of the stake, subject to a lifetime limit of £2 million.

The planned hikes in CGT have been the most controversial aspect of the coalition agreement for the Conservatives.

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