This is the text of the Chancellor's statement on capital gains tax, to be made today:
CAPITAL GAINS TAX
CHANCELLOR ALISTAIR DARLING'S STATEMENT
24 JANUARY 2008
With your permission, Mr Speaker, I would like to make a short statement on capital gains tax reform.
Mr Speaker, following discussion, I am today announcing the introduction of a new capital gains tax entrepreneur's relief. This will complement the new regime which I set out at the Pre-Budget Report last year.
The reformed regime, and the new entrepreneurs' relief, will come into effect in April.
The entrepreneurs' relief will provide a special 10 per cent tax rate for the first £1 million of qualifying gains.
Gains made on different occasions will qualify for the 10 per cent rate up to a cumulative lifetime total of £1 million of gains. Gains in excess of this will be taxed at 18 per cent.
The special 10 per cent rate will be available on the disposal of all or part of a trading business carried on by an individual either alone or in partnership.
It will also be available to individuals disposing of shares in a trading company, provided that the individual is an officer or employee of the company and takes a minimum 5 per cent stake in the business.
This measure will benefit the owners of small businesses when they choose to sell their business. And it will also benefit business angels and other business investors who take a 5 per cent or greater stake in the company concerned.
Mr Speaker, as a result of the reforms I have announced, entrepreneurs and material business investors will keep 90 per cent of the first £1 million of gains that they make.
And they, and everyone else, remain entitled to make gains of up to £9,200 a year without paying any capital gains tax. This annual exemption will rise again in April.
We estimate that next year, around 80,000 business owners and investors will make disposals eligible for the entrepreneurs' relief.
In approximately 90 per cent of these cases we expect the individual's entire gain to be taxed at the special 10 per cent rate.
In the other cases people will pay 10 per cent on the first £1 million of gains, and the standard 18 per cent rate on the excess.
The proposal remains in line with the Government's objective of keeping the tax system as simple as possible. And it is very much in accordance with representations from small business.
Mr Speaker, I estimate that the proposal will have a cost of around £200 million a year.
HM Revenue & Customs are today issuing further information about the scope of the new relief, along with draft legislation and supporting materials related to the capital gains tax proposals announced at the Pre-Budget Report.
These documents have been deposited in the Libraries of both Houses and are available on HMRC's website.
Mr Speaker, as with other aspects of the tax regime, I am determined that we do as much as possible to encourage entrepreneurship in this country and, in future Budgets will seek to do more.
I will therefore keep the £1 million lifetime limit for the entrepreneurs' relief under review.
I can confirm that we have retained the full range of reliefs for people investing in smaller, unquoted companies, including the Enterprise Investment Scheme and Venture Capital Trusts. Rollover relief also remains available to people wishing to reinvest in another businesses.
Taken together these include generous income tax reliefs and capital gains tax reliefs and exemptions which have helped thousands of businesses.
We have also retained a number of tax advantaged share schemes which include, Save As You Earn Schemes, Company Share Options Plans and Enterprise Management Incentives.
Mr Speaker, in December 2007 the Treasury and HM Revenue & Customs issued a consultation document that included legislation designed to prevent individuals from disguising income streams as a capital return in order to avoid tax.
I will set out the Government's next steps on measures to prevent abuse of the tax rules when the consultation process has concluded.
I want to be satisfied that only genuine investors benefit from the reformed capital gains tax regime.
Mr Speaker I have also received representations from the life insurance industry. This is a complex area and there are no clear answers but we are ready to hear further representations.
Mr Speaker, the UK business environment remains one of the best in the world. I am determined to keep it that way.
My announcement today, with measures to simplify the regime, will ensure that this continues to be the case.
I commend this statement to the House.
I can live with this. It accords pretty much with my own suggestions. Pity this wasn't done earlier.