Brown's £5bn bonus for ex-bosses

GORDON Brown will clear the way for a £5bn-plus payday for entrepreneurs and business people in his 17 April Budget, Financial Mail has learned. He will backdate to 2000 a lavish tax break for those who sell their businesses and take IOUs instead of cash.

Among those to benefit are the Fleming banking dynasty, Kwik-Fit car repair founder Sir Tom Farmer and fellow Scottish entrepreneur Tom Hunter.

This month was already due to see bumper payouts to those who sold their businesses in 1998 and had held IOUs -known as loan notes - for four years, as required by tax law. Now Brown will not only make good on a pledge to cut the waiting period to two years, but will tell the Inland Revenue that the reduction is to be backdated.

Any loan notes issued up to April 2000 can be cashed in next month, boosting consumer spending.

'This means several billion pounds will be cashed in during April,' said Mike Warburton, tax expert at accountants Grant Thornton. 'Noteholders will demand payment from a lot of companies that had not expected to have to find the money.' Among those to benefit will be the Fleming family who are believed to have taken loan notes worth £1.8bn when the Robert Fleming merchant bank was sold to America's Chase Manhattan in 2000.

Kwik-Fit founder Farmer took loan notes of £77.6m when he sold his group to car giant Ford in 1999. Hunter will also gain after taking £171m in loan notes when he sold his Sports Division retail chain to JJB Sports in a £290m deal in 1998.

The tax break was introduced four years ago to encourage people to build up their businesses. It cut the capital gains tax bill from 40% to 10% for someone selling a business they had owned for at least 10 years. The period was reduced to four years in Brown's 2000 Budget, prompting accountants to advise anyone selling a business within the four-year period to take loan notes rather than cash.