According to Liz Gallagher, senior tax manager at Trevor Jones, the motor trade accountancy firm, dealers planning on selling their businesses will be better off under the new rules.

The original proposals, which were announced in October's Pre-Budget Statement, were received less favourably and heavily criticised by leading business groups.

The new CGT rules still see the removal of Taper Relief from the beginning of the new financial year on 6 April and a single rate of 18 per cent, however yesterday the chancellor announced that a 10 per cent rate would apply to gains up to £1m. “The new system is not as advantageous as the old one but dealers will benefit under the revisions -- especially those making profits on sales up to £1m as they will not be affected,” she said. According to Gallagher dealers making bigger profits will be worse off under the new rules coming in on 6 April but will gain through the new concession. “A dealer whose original shareholding cost £100,000 and sells for £2m will make a £1.9m profit,” said Gallagher. “Under the current rules they will pay £190,000 in tax on the profits but from 6 April they will pay £262,000 but had the 18 per cent flat rate gone through they would have paid £342,000 so they will be £80,000 better off.”

However, she warned that the new rules do not appear to extend to profits on premises being sold by dealers. “While the new rules are welcome for family businesses being sold it does not appear to extend to the disposal of trading premises or property used for businesses,” she said. She also predicted there would be a rush among some dealer owners expecting to make gains over £1m, to exit their businesses before the end of this tax year. Meanwhile, the changes have been heavily criticised by the CBI who led the protest against the original proposals. “The bottom line is that the reaction of the UK government, in the face of an economic slowdown, has been to slap on a major tax hike of £700m,” said director general Richard Lambert.