Brown in another tax manoeuvre

Gordon Brown’s tenure has featured as many U-turns as a hapless police car in an episode of the Dukes of Hazzard. Now the government is performing an about-face over capital gains tax, only three weeks after it announced a sweeping 18% rate. But this is one change that may well have the business community high-fiving each other and bursting into shouts of ‘yee-hah’.

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Last Updated: 31 Aug 2010
Under the 18% fixed rate, many company owners will face a near-doubling of the tax they pay on selling their assets. The business community was predictably miffed about this, especially as the reform will hit entrepreneurs and owners of smaller businesses – a radically different breed from the super-rich private equity bosses the fixed rate was supposed to be targeting. Now Chancellor Alistair Darling is to soften the blow by granting small business owners £100,000 in tax relief when they sell up and retire.

The move hardly says much for Brown and the strength of his convictions, but the tax picture now looks a fair deal brighter than it did three weeks ago for the average small business owner, whose retirement plans would have taken a hit under the previous CGT proposals.

Private-equity bosses will probably still be grumbling. Still, it could be worse – they could be Americans. The super-rich on that side of the pond may well be holding their heads in despair today at the actions of one of their own: Warren Buffet, the country’s second-richest man, has taken the unprecedented step of complaining that he should be paying more tax. It’s the equivalent of the square kid in school suggesting that the class isn’t getting enough homework.

Buffet has even singled out the problem that he pays a lower rate than his receptionist. Our own private-equity heads, themselves castigated this summer for paying less tax than their cleaners, would perhaps do well to take their 18% rate and keep quiet.

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