Business leader slams tax confusion

The government's planned changes to Capital Gains Tax (CGT) have left industry in a "state of complete confusion", according to Confederation of British Industry (CBI) director-general Richard Lambert.

Speaking on the BBC's Today Programme, Mr Lambert admitted that businesses are "finding it impossible to act rationally" and claimed that entrepreneurs would consider selling their firms because of uncertainty about tax increases.

He said: "If you've built up your business over donkey's years and suddenly face a higher tax bill, you have to think about whether to get out. And that's what people are doing."

"They are beginning to take decisions that have nothing to do with common sense, because they don't know what their tax liabilities are going to be."

When Chancellor Alistair Darling addressed the CBI in November, he expected to publish details of CGT changes within three weeks, however the Treasury has yet to issue a statement on the plans.

CGT is a personal tax levied on profits made from selling assets, such as buildings or investments. Currently, entrepreneurs can pay as little as 10% tax on the profits from selling a business if they've held the assets for longer than two years.

The low rate was introduced by then Chancellor Gordon Brown in 1998, to encourage entrepreneurship.

With the tax seemingly certain to increase from 5 April, Mr Lambert described it as "utterly crackers" that a buy-to-let investor making a short-term investment could pay the same tax as the owner of a business built up over 20 years.

He continued: "At the CBI, we can't remember anything which made people quite so annoyed. People are mightily cheesed off."