The Government will cut capital gains tax on business assets to as low as 10 per cent next year as the centrepiece of plans to stimulate investment and competition.
Gordon Brown, the Chancellor of the Exchequer, yesterday said he was determined to create an "entrepreneurial culture available to all". Mr Brown said Britain had to narrow the gulf with the United States in terms of productivity, company start-ups and business investment and innovations. He said Budget 2002 would include cuts in capital gains tax for businesses. This would create a regime that would be "more favourable to enterprise than the US".
From next April: CGT on business assets, including shares in unquoted companies held for one year, will be cut to 20 per cent from 35 per cent; the rate on assets held for two years will be lowered to 10 per cent from 30 per cent; and the Government will consider extending cuts in CGT to areas such as private investment to improve the incentives to invest.
Next year's Budget will contain an extension of the lowest 10 per cent rate band of corporation tax. The Government also proposes increasing the qualifying size of companies that can grant employees up to £100,000 in tax-free share options. The cost of the package to the Treasury would be "significant". Alex Henderson, at accountants Andersen, said CGT reform was "tremendous" but warned the system was getting too complex. "The Chancellor really must turn his attention to the plans for it to be simplified."
The Treasury intends to reform the competition regime to make it easier for small businesses to start up and thrive.
These plans include: a unit in the Office of Fair Trading to seek out anti-competitive practices; powers for the Competition Commission to conduct in-depth investigations of mergers and monopolies, taking decisions out of the hands of politicians; tougher sanctions possibly including prison sentences for executives guilty of operating price-fixing cartels; reform of the law on personal bankruptcy "to reduce the penalties for honest failures"; speed up the granting of planning permission; and a review of the long-term retail savings and life insurance industries, conducted by Ron Sandler, former chief executive of Lloyd's of London.
Mr Brown said: "The new Britain of enterprise for all cannot be built on inadequate investment, low skills, boardroom complacency, workplace resistance to change, or on cartels or restrictive practices."
Business groups were split over the planned tough competition regime. The Confederation of British Industry said cuts in CGT and corporation tax were a "clear indication the Government understands the importance of business com- petitiveness". But Digby Jones, its director-general, said: "Plans to criminalise competition law look premature. UK firms would have the disadvantage of competing in a market where Britain would be the only large EU country with such draconian legislation."Reuse content