The immediate switch in capital gains tax from 18 per cent to 28 per cent, as announced by chancellor George Osborne in the emergency budget, has caused dismay among dealmakers.

Neil Sutton, partner and head of corporate finance at PricewaterhouseCoopers, says: ‘There will be some relief that the top rate of capital gains tax has been raised to only 28 per cent, but what is disappointing is its immediacy. There was some hope in the UK dealmaking community that any rises would be introduced next April.

‘This would have provided a window of opportunity for the sales of businesses to be prepared, bringing much needed stimulus to the UK M&A market. As it is, that window remains nailed firmly shut.’

By and large, the budget was well received by businesses. Paul Webb, tax partner at the Robert James Partnership, comments: ‘Overall, it was quite refreshing and not as bad as we’d anticipated, although CGT was the biggest shock in the budget.

‘Extending entrepreneurial relief to £5 million was quite canny. [It provides] enough of an incentive to keep businesses driving forward for the next few years and to build up to a substantive size.’

Mary Monfries, partner and head of private business at accountancy firm PricewaterhouseCoopers, comments that most agree the pain of the budget could have been much worse: ‘Some will see this as a missed opportunity to encourage significant "risk capital" investment by individuals and employees in entrepreneurial businesses by having a lower rate for all business asset gains.

'Entrepreneurs' relief only applies to those holding at least a 5 per cent stake in the business and, even with the increase of the lifetime cap to £5 million, some will say it doesn't match the kind of aspirational growth we need to be inspiring.’

Other measures announced in the budget include a rise in the rate of VAT from 17.5 per cent to 20 per cent in January 2011, and a commitment to reducing corporation tax to 20 per cent.