Alistair Darling has confirmed a flat rate of 18% of capital gains tax (CGT) which will be introduced on 5 th April but has offered concessions to small business owners.

Under the revised proposals, small business owners will only have to pay 10% tax on any profits they make up to a cumulative limit of £1m. Any profits beyond this will be taxed at the higher rate of 18%.

Darling proposed in October’s pre-Budget report to scrap the lower 10% CGT rate and replace it with an 18% flat rate which spurred months of lobbying from business groups and small firms claiming it stifled entrepreneurialism. The Chancellor announced further decisions will be held with the insurance industry to find a solution to the problems caused in the insurance bond market by the proposed changes to capital gains tax.

Savills fears this ‘first slice’ relief would be calculated on a lifetime basis with the rate returning to 18% once it is used up. Whilst it will help small businesses in one-off asset sales, Savills believes it is of little benefit to the serial entrepreneur or those with a large trading asset base.