This relief creates incentives for investment in assets which generate sustained growth, with particular support for entrepreneurial investment. A business asset includes substantial shareholdings in a trading company. The Government will assess the case for substantial reductions in the thresholds of 5 per cent and 25 per cent at which these shareholdings qualify. Taper relief applies to the capital gains of individuals, trusts and the personal representatives of deceased persons, but not to the capital gains of companies.
Different tapers apply to business assets and non-business assets.
The present CGT taper relief reduces the taxable gain on a business asset from 100 per cent if the asset has been held for less than one year after 5 April 1998 to 25 per cent if held for more than 10 years - effectively the rate of tax for a higher rate taxpayer is reduced from 40 per cent to 10 per cent.