In what appears to be at least a partial climbdown, the Government is considering re-introducing a capital gains tax retirement relief of £100,000 for small businessmen who sell up and retire. The Times reports:
"Three weeks after Mr Darling announced his plan for a single 18 per cent rate
of capital gains tax he is to soften the blow by giving £100,000 in tax
relief for small businessmen who sell up and retire. It means that business owners who would have faced a near-doubling in the tax
they pay on selling their assets – from 10 per cent to 18 per cent – will
now pay far less."
"The U-turn comes after sustained pressure from the CBI, the British Chambers
of Commerce, the Federation of Small Businesses and the Institute of
Directors, which joined forces against the Government after being flooded
with complaints from their members."
It will be interesting to see what finally does appear, and whether Alistair Darling will raise other taxes to meet the revenue shortfall, but this is a very positive step. The Government is finding it increasingly difficult to raise taxes, which can only be a good thing.
On another note, the same Times report reveals that doubling of the inheritance tax threshold for married couples (or at least those who didn't have the know-how to take advantage of the existing loophole, which is probably a considerable number and in any case underlines just how complicated inheritance tax is) announced in the Pre-Budget Report was considered for inclusion in the March Budget:
"The Times has also learnt that Mr Brown intended in his last Budget as Chancellor in March to announce the £700,000 inheritance tax threshold for couples that was finally introduced by Mr Darling on October 9. It was removed from the March Budget after Mr Brown concluded that the cost of making the changes retrospective to enable husbands and wives to use the allowance of their late spouses would be too high. He had also decided that a 2p cut in income tax from next April would be the eye-catching feature of his final package.
"But his decision to hold back on inheritance tax opened the way for the Conservatives to grab the initiative at their Blackpool conference with plans for a £1 million threshold. Mr Darling then went some way to matching the Tory plans by dusting off the proposals that were almost adopted in March and setting a threshold of £700,000 for couples from 2010.
"Ironically the capital gains tax changes eventually would have raised nearly £950million a year and would have gone a long way to paying for the inheritance tax shake-up, which will eventually cost £1.4 billion annually."
Now imagine how things would have looked had Gordon Brown listened more closely to the TPA and included the inheritance tax measure in March. It just shows how tax cuts make winning politics.