Chancellor Alistair Darling has announced a new capital gains tax relief for entrepreneurs, following months of frantic lobbying from business leaders.

Entrepreneurs' relief will be targeted on the owners of small businesses, and will apply when they sell their business.

The relief will also be available to all employees and company directors who invest a material stake in a qualifying company. It will take effect from 6 April 2008 alongside the rest of the capital gains tax reform package.

The relief will deliver a 10 per cent tax rate for up to the first £1 million of lifetime capital gains.

Individuals will be able to claim relief for gains made on multiple occasions up to a cumulative total of £1 million. Gains in excess of the £1 million lifetime limit will attract the standard 18 per cent rate of tax.

This announcement follows major reform of the capital gains tax regime in the 2007 Pre-Budget Report which will deliver a more sustainable, simplified and internationally competitive system.

The Government said it is also continuing to deliver targeted support through the Enterprise Investment Scheme and Venture Capital Trusts.

These initiatives provide a range of income tax and capital gains tax relief to individual investors, helping to improve access to full-risk equity finance for small businesses.

Related articles

• Small firms expected to win £200m capital gains concession
• Small businesses most worried about tax
• MPs criticise capital gains plans
• SMEs increase pressure over capital gains

Related links

• HM Treasury
• British Chambers of Commerce
• CBI

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