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This page is specifically about the new opportunity which we have put together as a package - for more general information on the scheme
The plan will be of benefit to an individual who had a large capital gain (say) £200,000 on an asset which did not qualify for business asset taper relief - e.g. on a second home, share portfolio etc prior to 5 April 2008, say 31 December 2006. Tax of around £76,000 will have been paid.
You invest £190,500 in a company say December 2008 which we will set up for you - leaving £9,500 covered by annual exemption
The company acquires a suitable business from an Insolvency Practitioner for a goodwill payment of £5,000-£10,000 and the previous owner will continue to be involved in the business to run it day to day under our close supervision. After four months you can claim a refund of £76,000.
After an assessment period of perhaps six months then you will have the option to either invest the balance of the money within the company on growing it as set out in the business plan. You will then have succeeded in deferring the capital gain until you choose to sell the shares in the company - provided you trade for three years.
If you decide against making the further investment then you are likely to sell the business and liquidate the company in summer 2009. Even if you have lost (say) £25,000 after fees etc on the transaction you have succeeded in deferring the tax, and most importantly the gain will be taxed at 18% after your annual gains exemption - so the tax will be £28,260 payable in January 2011. The benefit to you is the tax savings plus interest on the tax for over two years leaving you better off by over £30,000. On larger transactions the savings are greater.
In the right circumstances some clients can increase the tax saving very considerably by acquiring property used for the purposes of the business and then transferring this into a self-invested pension.
To find out more about the , please call us at +44 (0)1223 507080 or email at info@tax.uk.com
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Outline of the plan