"I’m sure most of you are aware by now that the government is proposing significant changes to capital gains tax (CGT) legislation which are planned to come into effect from 6 April 2008.

This will see the abolition of Business Asset Taper Relief and a flat rate of 18% for individuals imposed on all capital gains.

Certainly the nod towards simplification should be applauded and in many instances the changes will lead to a significant capital gains tax saving (particularly for individuals who might otherwise have paid CGT at 40%).

But for the business community the changes have wider ranging consequences and many business owners are potentially faced with an 80% increase in the CGT charge upon sale of their businesses.

Suddenly, changes that we’re told were aimed at the favourable tax regime enjoyed by private equity investors are causing a penal increase in tax rates for small business owners.

As a result, the government has come under some fairly heavy fire from the business community and the result, announced only a few days ago, is Entrepreneurs’ Relief.

Of course the mechanics of this relief are not yet clear (and indeed may not be fully clarified until after the relief comes into effect).

But the gist of it seems to be that qualifying entrepreneurs (yet to be fully defined) will have a lifetime capital gains allowance of £1 million below which they may still be able to secure a 10% CGT rate on the sale of qualifying assets (also yet to be fully defined, but certain to capture most sales of shareholdings of more than 5% in private trading companies).

“Hoorah,” we all shout, “the Government has listened to the concerns of the smaller businessman”, but the devil may well be in the detail and I’m not ready to celebrate quite yet.

This whole saga has been a tax fiasco for the Government and I’m sure it’s not be finished yet.

Watch this space.

Of course there also remains much scepticism as to whether the key change, the abolition of Taper Relief, will have its intended effect on the private equity houses anyway and I now read that several of the larger houses have been approached by foreign authorities trying to tempt them into lower tax jurisdictions.

Ultimately the changes may not hit their target at all.

Finally, I’d like to comment on the fact that many clients of mine have asked whether it would be worthwhile trying to sell their business before April 5.

Assuming that Entrepreneurs’ Relief works in the way that we currently believe, this certainly eases the issue for smaller companies.

But for larger disposals there may still be a substantial saving to be had by selling now.

Time is short though and my view remains that if you weren’t already thinking of selling in the next year or two, then you probably shouldn’t let this tax change determine your entire business strategy.