The chief executive of Old Mutual has urged the Government to abandon its controversial capital gains tax (CGT) reforms after bond sales at the London-listed insurer slowed sharply in the weeks after Alistair Darling's Pre-Budget Report.

Jim Sutcliffe said that plans by the Chancellor to introduce a flat-rate capital gains charge of 18 per cent "have made our life a little difficult".

He said that the changes, unveiled to a storm of protest last month, effectively wipe out a tax benefit to long-term bondholders, who might otherwise pay a 10 per cent rate.

Mr Sutcliffe said there had been a "significant tail-off" in bond sales in subsequent weeks, although he declined to be drawn on specifics.

Bond sales form part of an Old Mutual business that posted improved sales worth £205 million during the first half.

"The Government may yet change the rule. I think we'd like to see it done a different way," Mr Sutcliffe said.

"If it happens then the change needs to be more gradual, so people can plan more in advance."

His call on the Treasury to rethink the tax change came as ProShare, the not-for-profit lobby group for employee share ownership, laid out its opposition to the measure on behalf of the 1.7 million workers who are part of company share-save schemes.

ProShare said that 272,000, or 16 per cent, of scheme members were likely to be worse off under the new rules.

Previously, had they held shares for at least two years, they would have been liable to pay a CGT rate of only 5 per cent.

Mr Sutcliffe said that higher sales of regular premium business had offset the fall in bond sales in the UK, which otherwise was "firing on all cylinders".

Life sales in the UK came in at £569 million during the first nine months of the year, accounting comfortably for more than a third of group life sales of almost £1.3 billion.

Group mutual fund sales rose to £6.2 billion, and assets under management increased by 15 per cent to £41.5 billion.

Mr Sutcliffe said that Old Mutual was having strong success with its growth businesses in Asia, particularly in China, where gross premium income over the nine months increased more than threefold to £103 million.

Separately, Old Mutual further distanced itself from its South African heritage as it began talks to sell a controlling interest in its car and home insurance business Mutual & Federal Insurance to Royal Bafokeng, a local black empowerment group.

Mr Sutcliffe said that talks were at an early stage but could result in a £450 million payment for the insurer.

This could finance share buybacks over the longer term, he said.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive