In a statement in the House of Commons on 24 February, the Chancellor of the Exchequer, Alistair Dar...
In a statement in the House of Commons on 24 February, the Chancellor of the Exchequer, Alistair Darling, brought relief to entrepreneurs threatened by changes to the capital gains tax regime, but still had no clarity to offer the offshore life industry.
Darling announced that with effect from 6 April, a 10% rate of CGT - instead of the new flat rate of 18% - will apply to the first £1m a year of qualifying gains by an owner, officer or employee with more than a 5% stake in a business.
Shadow Chancellor George Osborne said that Darling had "dithered and delayed" for four months since the pre-Budget report before announcing a retreat on his "one big idea". "It's a textbook example of how not to write a textbook," he added.
But despite acknowledging representations from the ABI and life companies, Darling has still made no firm commitment as to whether there will be similar concessions for offshore bonds. Describing the situation as a complex one with no clear answers, he said there were particular problems with one particular set of products but that it was not clear that solving those problems would not create other problems.
Asked whether there was any hope for the insurance industry to get an answer before the new regime is due to come into force in April, Darling said his officials would be speaking to the industry over the next few days but that he didn't want to raise insurers' hopes. "We will help if we can but it is not immediately obvious the problem can be easily resolved," he said.
Responding to the announcement, a Prudential spokesperson said: "We continue to have a working dialogue with Government on its CGT proposals. It is in principle encouraging that Government has recognised the need for further discussion with the industry. However, any discussion must be open and substantive.
"At present, consumers rightly have a choice of long-term savings products. Government action must not discriminate between different types of saving.
"If it does, Government must explain to consumers - both thinking about saving as well as those who already have savings and investment products - why they prefer one form of savings over another."
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