Once upon a time the contents of the UK Budget remained a closely-guarded secret until the Chancellor rose with his red box in the Commons; but then came Gordon Brown, who is performing a fiscal strip-tease that will leave little or nothing to the imagination by Budget day.
The latest revelation is that the Chancellor will not only make good on a pledge to cut the waiting period for reduced capital gains tax on business assets from four years to two years, but will backdate the concession, meaning that thousands of business owners who took loan notes between 1988 and 2000 will be able to cash them in immediately and still benefit from the reduced 10% rate of CGT.
Among those to benefit are the Fleming banking dynasty, Kwik-Fit car repair founder Sir Tom Farmer and fellow Scottish entrepreneur Tom Hunter. This month was already due to see substantial payouts to those who sold their businesses in 1998 and had held loan notes for four years.
"This means several billion pounds will be cashed in during April," said Mike Warburton, tax expert at accountants Grant Thornton. "Noteholders will demand payment from a lot of companies that had not expected to have to find the money."
The Fleming family are believed to have taken loan notes worth UK£1.8 billion when the Robert Fleming merchant bank was sold to America's Chase Manhattan in 2000. Kwik-Fit founder Farmer took loan notes of UK£77.6 million when he sold his group to car giant Ford in 1999. Hunter will also gain after taking UK£171 million in loan notes when he sold his Sports Division retail chain to JJB Sports in a UKpound 290 million deal in 1998.
The tax break was introduced four years ago to encourage people to build up their businesses. It cut the capital gains tax bill from 40 per cent to 10 per cent for someone selling a business they had owned for at least 10 years. The period was reduced to four years in Brown's 2000 Budget, prompting accountants to advise anyone selling a business within the four-year period to take loan notes rather than cash.
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