Smaller businesses will now pay just 10% on capital gains tax up to the first £1 million, instead of the 18% which was proposed last autumn.

Alistair Darling, Chancellor of the Exchequer, said the back track was an attempt to help entrepreneurs.

Alec Murray, chairman of the Retail Motor Industry Federation (RMIF), said: "The Government’s accommodation for small businesses on capital gains tax will be beneficial, but will still cause some pain for traders where long-term investment has been a priority."

Murray believes that the Government’s delay in announcing the change could have had a detrimental on businesses: "Why has the Government allowed confusion over the issue to continue for so long? This has been damaging to businesses, and therefore bad for the economy."

The ‘entrepreneurs' relief’ will be available when the updated capital gains tax regime comes into force in April.