ALMR hits out over Capital Gains Tax changes

29-Nov-2007 - Last updated on 13-Jun-2013 at 11:00 GMT

The Association of Licensed Multiple Retailers has added its weight to the business campaign to force a re-think on Government proposals to reform...

The Association of Licensed Multiple Retailers has added its weight to the business campaign to force a re-think on Government proposals to reform Capital Gains Tax, backing calls by the Conservative Leader at this week's CBI Conference for a rethink and a simpler tax regime.

The Chancellor announced plans to replace the current system of taper relief with a flat tax rate of 18% from April 2008 in the Pre-Budget Report in October. Since then, the ALMR has been lobbying hard to explain the impact of the proposals, and this week was in detailed discussions with Treasury officials to fight the plans.

Chief executive, Nick Bish, said: "The Chancellor's plans are an effective tax rise of 80% on hard working individuals and small businesses. These plans will hit the pub trade hard because of the large investment in high cost assets.

For example, a pub lease acquired for £100,000 in 2000 and sold in 2007 for £250,000 would attract a tax bill of some £11,000. But the same lease sold for the same amount after April 2008 would attract a tax liability of some £25,000.

That change has a dramatic impact on business planning within the sector. Small pub companies have simply been presented with the change as a fait accompli and forced to either sell up quickly or see a substantial drop in their returns."

The ALMR has been in detailed discussions with politicians to explain the impact of the proposed change on pub businesses, and to propose amendments to reduce the damaging effects - calling for the lower 10% tax rate to be retained for genuine business assets where any capital gains are re-invested in a new business venture or for the current tax-free allowance to be significantly increased.

Bish added:"Our members are not city fat cats running private equity firms, they are hard working small businessmen most of them are serial entrepreneurs, re-investing the gains made from developing their pubs and bars in new business ventures. These proposals will actively impair this virtuous cycle.

"The Chancellor this week called his proposals 'controversial' that has to be the understatement of the year. They are ill-thought through and entirely counter-productive to the Government¹s stated aim of encouraging investment."