In his budget, Darling said that from April 2008 he will introduce a flat rate capital gains tax of 18 per cent.
Chiltern director of direct tax Paula Tallon says the changes will mean that investors in small businesses, employees and shareholders in private companies will see their tax increase from 10 to 18 per cent, while tax for investors in property and large quoted companies will drop from 40 per cent.
She says: “There will be no incentive for people to invest in small companies and these businesses will lose much-needed funding.
“This really is a case of the rich getting richer and the poor getting poorer.”
Ernst & Young UK head of tax Paul Davies says the changes are clearly motivated by the heightened focus on private equity.
He says: “We are extremely disappointed with these proposals as they threaten to undermine the entrepreneur culture that has blossomed over the last decade. Complete abolition of the taper removes a large incentive for entrepreneurs and challenges the ‘dragon’s den’ success of the UK. It also represents a fundamental retreat from his predecessor’s key policy.”
