Darling's £200m climbdown on capital gains tax fails to ease business leaders' anger

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But the Chancellor came under attack from business leaders and the Opposition who said his changes to the tax would still damage enterprise.

He was forced into making the concession in his reforms to capital gains tax following a three-month campaign by small businessmen.

From April 6, an "entrepreneurs' relief" will allow company owners to pay at only 10 per cent on the first £1million of gains.

This will also benefit those who own at least 5 per cent of the shares in a company. About 80,000 business owners and investors will benefit, the Treasury said.

After the first £1million, however, the new CGT tax rate of 18 per cent will apply.

The announcement in October of the 18 per cent rate attracted a storm of protest.

Under previous rules, those selling a business would pay tax at only 10 per cent if they had held the asset for at least two years. Now they will have to pay tax at 18 per cent on all gains over £1million.

The changes will be worth £700million a year to the Treasury. The figure was £900million before yesterday's concession.

Shadow Chancellor George Osbourne said of Mr Darling: "Can he name a single other major Western economy that is currently planning to raise taxes as its response to the global slowdown?"

Richard Lambert, director general of the CBI, said the "wealth and job creators of the UK's economy will be seriously clobbered" despite the concession.

He said the CGT rules still represent a "major tax hike" and warned: "The relationship between Government and business has been damaged by this affair."

Some of the biggest losers will be workers who pay into their company's share schemes, known as Save As You Earn. Under the new rules, their tax charge will soar from 5 per cent, if they were basic rate taxpayers, to 18 per cent.