The British Hospitality Association (BHA) has joined the increasing number of industry bodies which are calling for the government to rethink plans to change the capital gains tax regime.

BHA fears that the decision by chancellor Alistair Darling to scrap the taper relief, which currently allows investors to pay just 10 per cent tax on investments held for more than two years, and to replace it with a flat rate of 18 per cent will stunt growth of small and medium sized businesses.

Bob Cotton, BHA chief executive, said: “Because of the removal of the so-called taper relief, hoteliers and restaurateurs who sell their business on retirement will be paying 80 per cent more capital gains tax then they would have done before the spending review.

In fact, the tax hike could well be more in the hospitality industry, where ownership tends to be long-term. This is because the chancellor ha also got rid of inflation indexing before 1998.

This could leave these owners with an even higher tax bill if they sell after next April.”

So far, Darling’s plans have also been attacked by the Confederation of British Industries (CBI), the Federation of Small Businesses (FSB) and the general workers union GMB.

FSB called the proposals “totally unacceptable” and a “hammer blow to small businesses.”