The reform was part of a simplification of the tax, however, it has been argued, that the overall outcome is a return to something close to the original 1965 CGT regime without the differentiation between short-term and long-term gains. 

The CGT reform will seriously affect many owners of businesses or business assets who have enjoyed an effective 10% CGT rate.

In response to the widespread criticism of the CGT reforms, the Chancellor conceded, on 24 January 2008, by announcing a new Entrepreneurs' Relief to reflect "the Government's continued commitment to supporting small business and entrepreneurs".  This relief will apply to owners of small businesses when they sell their business, however, it will not be as generous as the "business asset taper relief" currently available. 

The Entrepreneurs' Relief introduces a lifetime allowance of £1 million of gains that can be taxed at 10% as opposed to 18%.  To qualify for the relief, it is necessary to hold at least 5% of the ordinary shares in the company and to be either an employee or officer of the company or to own a business as a sole trader or a partner.  The Entrepreneurs' Relief appears to be very similar to the retirement relief available in the 1990s but with the qualification period of only one year and no minimum age requirement. 

So, what are the options for owners of businesses or business assets before 6 April 2008?  Where it was already intended to make an early disposal of a business or business asset that has been held for at least two years, it is recommended that the disposal occurs before 6 April 2008 to secure the effective 10% CGT rate. 

If a sale cannot be effected before 6 April 2008, it is advisable to undertake another type of disposal for CGT purposes triggering taper relief and benefiting from the effective 10% CGT rate.  The transfer of a business or a business asset into a trust is a "deemed disposal" for CGT purposes, currently benefiting from business asset taper relief and indexation allowance (for the period from April 1982 to April 1998 only).  For some assets, especially land and property, indexation allowance is a valuable relief that can more than double the base cost of the asset, significantly reducing the gain chargeable to CGT.  The transfer of a business or business asset into a trust would crystalise the gain made, providing an up-lift of the CGT base cost, which would be beneficial upon any future sale of the business or business asset.  Once the trust has been created, the business or business asset may continue to be run or utilised as before, with the trustees and beneficiaries of the trust being the previous owners of the business or business assets.