S R Lynn & Co Accountants - Cash Flow Forecasting, Budgeting, Management Reporting, Management Accounts, Payroll, Personal Tax, Corporation Tax, Company Nursing, Turnaround management, Milton Keynes, UK.

S R Lynn & Co

Deferring Capital Gains

With the recent reduction of capital gains tax (CGT) from 40% to 18% for gains realised after 6th April 2008, clients should be aware that it is now possible to defer capital gains arising in the previous 3 years to the current lower rate of 18%, even if the tax has already been paid - but the clock is ticking.

All that is required is to make an investment into an Enterprise Investment Scheme (EIS) within 3 years of the date the gain was realised. This in turn will defer the gain into the current 18% regime and refund any tax already paid. If more of an incentive is needed, then 20% income tax relief is also given on the investment in the current year and the investment will be exempt from inheritance tax after only 2 years of ownership. Current EISs are being structured to capitalise on this CGT differential and are being offered on a more conservative basis to minimise investment risk. The 22% capital gains tax advantage together with 20% income tax relief offers a return of 42% even if there is no investment growth.