Business leaders renewed their attack on the Government over capital gains tax yesterday, as tax advisors said that its policy U-turn would do little to alleviate the burden on entrepreneurs.

Alistair Darling’s plans, revealed yesterday by The Times, to grant £100,000 in tax relief to businessmen who sell up and retire was mutedly welcomed as a “first helpful step” but one that failed to address businesses’ main concerns.

Tax specialists said that the new proposal would be small beer for business owners facing an increase in tax from 10 per cent to 18 per cent next April, and would do nothing for venture capitalists and serial entrepreneurs.

The Treasury appeared last night to be open to further persuasion, after a bruising three weeks in which Britain’s four main business groups have mounted an unprecedented attack on the key tax-raising measure in the Pre-Budget Report.

The Times understands that the Chancellor is considering an even higher level of retirement relief than £100,000, alongside proposals for a 10 per cent rate on retirees and other suggestions from the business lobby. The Treasury is set to make its position clear by the end of the year.

Miles Templeman, director-general of the Institute of Directors, said that “£100,000 seems a bit of a low level compared to what retirement reliefs used to be . . . It wouldn’t be sufficient to offset the impact of the new tax. We’re looking for improvements in the ability of people to roll over their businesses . . . We’re pleased the discussions have started. Now it’s up to us to find helpful solutions that are good for business and the Government can live with.”

Richard Lambert, Director-General of the CBI, said: “It is a first helpful step but tackles one and only one of the critical problems that the Chancellor’s changes made. Nobody must be under any illusion that this will resolve the issue. There are many other businesses and investors who need help as a result of these ill-thought-out prebudget changes.”

David Frost, director-general of the British Chambers of Commerce, said: “The serial entrepreneur, those that build businesses, will still be hit by the proposals to have a higher single rate of 18 per cent.”

Stephen Herring, a tax partner at BDO Stoy Hayward, noted that the proposed tax relief would amount to savings of only £900 per annum for a business that had carried on for 20 years. Furthermore, he said, the changes would mean Mr Darling sacrificing part of his aim of simplifying the tax code.

A Treasury spokesman said: “As the Chancellor made clear last week to the Treasury Select Committee, a simplified tax system for capital gains is the right thing to do and will make the system more straightforward and sustainable while incentivising investment and enterprise. As the Chancellor noted, the Treasury is working with representatives of the business community on the details of the reform and on measures to improve the business environment and to continue to encourage entrepreneurship.”