Business leaders have written an open letter to the Chancellor, urging him to suspend proposals in his Pre-Budget Report to abolish Capital Gains Tax taper relief.

The heads of the British Chambers of Commerce, CBI, Federation of Small Businesses and Institute of Directors say the policy reversal came "as a bolt out of the blue" and they have written collectively to Alistair Darling because "the reaction of their combined memberships has been so universally strong".

The letter says that the impact of the decision "will be felt throughout the economy" by "discouraging longer-term investment and risk-taking". It threatens to hit the investments of those who have built up a small business, hike the tax bills of the 1.7 million employees in share ownership schemes, and "discourage business angels and venture capital funds from investing for the long game".

The business groups plan to meet the Chancellor to understand why he made his surprise decision and work with him to resolve the situation.

The four organisations, who were already "deeply concerned" by the raising of small business corporation tax over the next three years, now feel the government's ten-year effort to create a pro-enterprise agenda has been "put into reverse gear".

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