Tax Planning Opportunities for 2007/08

27 March 2008

As we are heading towards the end of the tax year, we thought we would set out a few general ideas for you to consider. If you would like more information about any of these suggestions then please give one of the team a call.

Film Opportunities

There are many different offers available to suit various investment profiles. Cash deposits start as low as £10,000. Some of the opportunities are investments into film with a very realistic upside potential with mainstream actors and actresses. Film opportunities generally shelter income from tax for the current tax year, and/or previous tax years, as far back as 2004/05. In addition, they can be used to shelter gains in either the current or previous tax year. As there are a number of different opportunities available, you should call your usual Chancery contact to see which is most appropriate for your circumstances.

Enterprise Zone Syndicates

We have already completed the fundraising for the Foxcover and Excelsior 4 EZS’s earlier this year, as well as completing on a £33,418,000 Syndicate in Hamilton. We have just launched a new Syndicate in Hamilton, details of which can be found in the News or Current Products sections on our website. As demand always exceeds supply, you should let us know if you are interested without delay. You will recall that Enterprise Zone Syndicates are investments in commercial property which attract Income Tax relief as the property is located in a government designated Enterprise Zone area. The majority of the deposit into the Syndicate is made up of the money which you would have otherwise paid to HMRC. Gearing is generally limited recourse.

Enterprise Investment Scheme (EIS)

This involves the investment into new shares of certain qualifying companies. There are several tax advantages to investing in EIS companies, generally these are:

Income Tax relief at 20% on investments up to £400,000
Capital Gains Tax deferral relief
Capital Gains Tax free on disposal of the EIS shares
Inheritance Tax benefits

As an example, an investment of £100,000 after both Income Tax relief and Capital Gains Tax deferral relief could cost as little as an effective £40,000;

Investment in shares

              100,000

Less Income Tax Relief (20%)

              (20,000)

Less CGT deferral (40%)

              (40,000)

Net cost of investment

  £           40,000

Currently Chancery is sponsoring two EIS companies. These are Extralife and Prescience Pictures. You may recall that Extralife Limited is involved in pioneering heart surgery and are now diversifying into general heart related medicine. Prescience Pictures funds gap financing and the production of films and television projects. Flyers and brochures for these products are available on request.

We also advise on EIS products promoted by mainstream providers. Some of these products are designed to offer downside protection in order to mitigate risk.

Venture Capital Trusts (VCT)

A VCT is an investment into a vehicle which invests into several small companies. This is very similar to EIS; however there are different tax reliefs available. These are:

Income Tax relief at 30%

Tax free dividends

Capital Gains Tax free on disposal of the VCT

All of the above are subject to a maximum investment of £200,000 per tax year.

We use major providers of VCTs which have either generalist or sector specific VCTs, some of which offer downside protection.

Pension Planning

Over the last couple of years clients have become much more interested in the tax benefits of making pension contributions. As you are probably aware, you are able to make gross contributions up to the lower of your earnings or £225,000 during the current tax year. This limit may be increased in some circumstances with careful planning.

If you would like to discuss these tax benefits further then please give one of the team a call. Our associated firm Chancery IFA LLP are also able to advise, set up and help you with your pension investments.

Heritage Property Trading Companies – Inheritance Tax Planning

Chancery is about to launch a tax efficient investment opportunity in property development, in partnership with experienced property developers and professional team. Investors are entitled to an attractive priority return on capital invested. The investment is particularly attractive to individuals who are looking to shelter some of their estate from Inheritance Tax liabilities as an investment is designed to qualify for Business Property Relief which means 100% exemption from Inheritance Tax once the asset has been held for two years.

We are just about to get our Information Memorandum published. If you would like a copy hot off the press please let us know.

Capital Gains Tax Changes

We may have written to you previously regarding the proposed Capital Gains Tax changes. It appears that we will be seeing an 18% Capital Gains Tax rate from 6 April 2008 and as such this presents some opportunities by either bringing forward the disposal where there is substantial Taper Relief or alternatively disposing of assets after 6 April in order to make use of the new 18% flat rate. Any assets purchased some time ago should also be brought to our attention as it may be possible that we can lock in any Indexation Allowance up until the new rules come into force.

OTHER CHANCERY PROJECTS

Northern Britain Property Partners 2 LP

Following the successful completion of Northern Britain Property Partners LP in 2006, Chancery has now opened a second fund for investment from individuals and SIPP’s. The level of investment is again enhanced by way of non status, limited recourse gearing for 75% of your overall investment. The investment rationale of the fund is to acquire property, pre let in the north of England and Scotland where the opportunity exists to increase yields and thus generate capital appreciation over the short to medium term.

If you would like a copy of either our flyer or Information Memorandum then please let us know.

Our New Magazine – Invest Today

You should have received our first and second editions of Invest Today. This magazine is a new venture for Chancery and I would encourage you to use the subscription card within the magazine to ensure you keep receiving future copies. We would also appreciate any comments you wish to make.

Contact Us

If you wish to explore the tax planning opportunities and investments further then please give us a call.

Chancery (UK) LLP is entered on the FSA register under reference 408069

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