In an embarrassing U-turn, the Chancellor, Alistair Darling, an-nounced yesterday that changes to the capital gains tax regime will not be announced until early next year. Mr Darling had previously promised, for example to the CBI conference last month, that a statement would be made to Parliament before the Christmas recess, which will start next week.
The Commons will not meet again until 7 January. The changes are due to start with the new fiscal year in April. Mr Darling told MPs that "it is not now going to be possible to conclude that process until the new year", because he needed more time to study the various representations he has received on the topic.
Mr Darling's decision provoked derision. Vincent Cable, acting leader of the Liberal Democrats, said: "A very serious error was made by the Government by not consulting more widely. That failure in communication stands behind a feeling of ill-will in the business community." George Osborne, for the Conservatives, asked: "Doesn't this represent the final humiliation of this Chancellor? In the next couple of weeks, he's going to have to announce major concessions, major U-turns."
Richard Lambert, the director general of the CBI, was more measured. He said: "We are glad that the Chancellor is paying attention to the submissions he has received from the business community, but he needs to get on with this decision urgently. People need to be able to make decisions about their businesses whether to invest, or whether to sell up. This uncertainty mustn't be allowed to continue."
In his pre-Budget report in October, Mr Darling announced a cut in the main rate of capital gains tax to 18 per cent from 40 per cent but at the same time abolished taper relief, under which the tax liability declines the longer an asset is held, down to 10 per cent in some cases. The stated aim was to simplify the system. The CGT changes were also designed to raise revenues to help pay for a relaxation in inheritance tax rules.
However, Mr Darling's reforms met with immediate and strong criticism from business bodies, which have been lobbying him ever since. There have been suggestions that Mr Darling might appease his critics by introducing changes in the rules on retirement relief or on those for small businesses.Reuse content