Business groups refused to back down in their campaign against the Treasury over its proposed changes to the capital gains tax regime, despite the revelation yesterday of a plan to water down the controversial policy.
The Chancellor has held a series of meetings with groups from across the business community incensed by his plan to impose a flat 18 per cent capital gains tax rate. Alistair Darling unveiled the new rules in the pre-Budget report last month. Several lobby groups decried the move, saying it would stifle entrepreneurialism and hurt small business owners.
In response to the criticism, it emerged yesterday that Mr Darling will soon unveil a plan to allow tax relief on up to £100,000 that small businessmen and women gain when they sell their assets.
Richard Lambert, the head of the Confederation of British Industry and a leader of the charge against the new CGT regime, said: "It is a first helpful step, but tackles one and only one of the critical problems that the Chancellor's changes made.
"Nobody must be under any illusion that this will resolve the issue. There are many other businesses and investors who need help as a result of these ill-thought out pre-Budget changes."
Mr Lambert was one of four business leaders who met with Mr Darling last week to express concern about the CGT change, set to come into effect in April.
Under the current structure, if private investors or entrepreneurs hold on to an investment for more than two years, they can qualify for "taper relief" that allows them to pay just 10 per cent tax, rather than the typical 40 per cent rate. The Treasury said no final decision had been made, but that it was engaged in dialogue with business leaders. A spokesman said: "As the Chancellor noted, the Treasury is working with representatives of the business community on the details of the reform and on measures to improve the business environment, and to continue to encourage entrepreneurship."