Guest blog: Kate Brown, a tax expert from AP Robinson & Co Chartered Accountants in Grimsby gives her take on this week's Pre-Budget Report

MANY local businesses could be worse off from next April as a result of the Pre- Budget Report. Alistair Darling’s tax changes could create risk for small businesses that are not ‘in the know.’Of critical importance are changes to capital gains tax. At present, if you hold business assets, including unquoted shares, for at least two years; the amount of capital gains tax you pay on their sale is discounted to 75 per cent of normal rates. That works out at just 10 per cent tax for a higher rate taxpayer or 5 per cent for a basic rate taxpayer. This is due to the taper relief, which was introduced by Gordon Brown in April 1998.Now on its 10th birthday taper relief is to be abolished and replaced with a flat rate of capital gains tax of 18per cent. Indexation allowance for individuals and trustees (but not for companies) is also to be abolished from April 6, 2008. This will simplify the capital gains calculations, but it does not hide the fact that the potential 10 per cent tax rate payable on the sale of businesses will jump to 18 per cent from April 6, 2008.The plans are the biggest disturbance of capital gains tax in the past eight years that I have been practising as an accountant. “The affect of the changes, which were primarily aimed at private equity investors, is potentially wide reaching, with many smaller family businesses also feeling the change.”The Pre-Budget Report also revealed that people who are planning to sell their business, or an asset used by a business such as a commercial let property, which they have owned for at least two years then savings of at least 8 per cent tax will emerge if they sell before April 6, 2008. However, the news isn’t all bad. The new flat rate of capital gains tax will be good news for anyone selling a non-business asset, such as a buy-to-let property. At present the maximum the taper relief for non-business assets is 60 per cent, but only available after 10 years of ownership, which works out at 24 per cent tax for higher rate tax payers and 12 per cent tax for basic rate taxpayers. If you expect to make a large gain on a non-business property, it may be better to complete the sale on or after April 6 2008 to save tax.The annual capital gains exemption (currently £9,200) will be retained, as will other capital gains reliefs such as hold-over, roll-over and the deferral of gains using the Enterprise Investment Scheme.