Gordon Brown Pledges CGT Cuts For UK Business

by Jason Gorringe, Tax-News.com, London

16 November 2001

In a speech given to the Institute of Directors last night, Chancellor Gordon Brown reinforced the government's commitment to a pro-business agenda.

The Chancellor announced that in his next budget, due April 2002, he would be reducing the CGT rate for business assets from 40% to 20% after one year, and then to 10% after two years. This move follows prolonged criticism from business leaders over excessive complexity, regulation, and taxation within the sector.

'When we came to power we had many priorities: health, education, transport and pensions,' Mr Brown is understood to have told the IOD. 'Amidst these priorities we decided that enterprise and long-term investment would be enhanced by reforms in capital gains tax.'

Commenting on the Chancellor's speech, Treasury officials said that Gordon Brown had been able to pledge CGT cuts as well as increased spending on health and education as a result of the tough economic policies he had pursued. However, there has been speculation in some sections of the UK media that this is not, in fact, the whole truth, and that although no immediate tax hikes are planned, the government may be forced to raise taxes later in the parliament to cover ambitious spending plans.

However, this latest announcement has been welcomed by business leaders and tax experts alike, and the Treasury department has revealed that when the new cuts come into effect, the UK capital gains tax regime will become more favourable than that of the United States.

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