The first three months will see a further increase in the number of capital gains tax avoidance schemes as the Chancellor fails to back down on pressures to reverse proposed changes that will come into force in April, a leading adviser to owner managed businesses has warned.
Darren Holdway, of HW Chartered Accountants in Birmingham, says experts are already seeking ways to get round the legislation.
"Whilst in the public arena, the Chancellor continues to face a daily lobby from all quarters of the business community, behind the scenes financial advisors, accountants and analysts are developing and implementing schemes that will enable company owners to avoid what is a punitive tax and an unprecedented change in regulations," he said.
"Headlines have focused on the 80 per cent increase in capital gains tax - from a low of 10 per cent to 18 per cent. The reality though is that having abolished both indexation and taper relief, many company owners could end with a near quadrupling of their tax - penal-ising those who have held on or developed their family businesses since 1982."
Schemes enabling business owners to avoid the hefty tax rise include making greater contributions to pension schemes - up to a maximum of £225,000, or in some cases double that - and transferring shareholdings into trusts prior to the fiscal year end, Mr Holdway said.
"The proposal to ease the burden on company owners by introducing a retirement relief band of around £100,000 has been met with a hollow laugh," he noted. "If it was intended as consolation to retiring business owners, it is wide of the mark.
"There's a lot of midnight oil burning amongst financial advisors and the next three months will see a flurry of activity - unless the Chancellor makes significant changes to his 'one size fits all' regulations."
