Two thirds of UK Aim-listed companies are against proposed 18% CGT rate

Independent research involving one in six UK-based Aim-listed companies reveals widespread concern about the proposed 18% CGT rate. 

197 companies whose primary operations are in the UK were polled as part of the survey, which asked respondents' opinion of the proposed 18% CGT rate.  Just over two-thirds (67%) were against the proposed changes: 

42% - strongly against the 18% CGT rate

25% - against

22% - neutral

11% - agree

1% -   agree strongly with the proposed changes 

The research was carried out by Smith & Williamson, the accountancy and financial advisory group, as part of their annual survey of the Aim sector. 

"It is clear that business owners are furious about the proposed change to the capital gains tax regime.  Ironically, the government has been fortunate that we are in a bear market right now and there are few capital gains to be made.  This might, otherwise, have precipitated a sell-off of Aim stocks before April 5^th which could have been disastrous for business owners and investors alike," said John Cowie, head of Aim at Smith & Williamson. 

Under the current CGT system shareholders in trading companies quoted on AIM are able to claim the business asset taper relief against gains arising on the sale of those shares. This results in an effective tax rate of 10% of the gain after two years of ownership. However in his Pre-Budget report Mr Darling announced his intention to scrap taper relief and introduce a flat rate tax of 18% with effect from 6 April 2008. 

"Unfortunately the new rules were announced without any prior consultation and the signs are that the Chancellor has been shocked by the adverse reaction to his plans by those taxpayers who suddenly face 80% increases in their prospective tax bills. Consequently the draft legislation promised for December has been significantly delayed, leaving taxpayers and their advisers in the dark and unsure what action needs to be taken by 5 April 2008," said Richard Mannion, national tax director at Smith & Williamson. 

Details of the survey

197 respondents were polled during November and December 2007

The respondents were FDs, CEOs or senior decision makers from UK-based Aim-listed companies 

In August 2007, there were 1685 companies listed on Aim; at that time 1220 had their primary operations in the UK. So 197 companies represents roughly one in six of the UK-based Aim companies. 

Background on companies who responded:

Market capitalisation:

For further information:

John Cowie, head of Aim
Tel: 020 7131 4333

Richard Mannion, national tax director
Tel:020 7131 4252
Mob 07799 761 326

PR queries

Kate Harrison / Layisha Laypang
020 7131 4228 / 4550

Note to editors

Smith & Williamson is an independent professional and financial services group employing over 1,400 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Bristol, Glasgow, Guildford, Maidstone, Salisbury, Southampton and Worcester. 

Smith & Williamson Limited

Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms. 

Smith & Williamson Corporate Finance Limited

A member of M&A International Inc. Authorised and regulated by the Financial Services Authority. 

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.