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Build a wood pile

The Kyoto agreement has created an investment opportunity for higher-rate taxpayers who can make an initial investment of 100,000. This opportunity has arisen because commercial polluters of the environment, such as chemical and gas compan- ies, face a punitive climate levy tax on their businesses unless they buy carbon credits.

These can be created by investment in forests which soak up carbon dioxide from the atmosphere.

MTM has launched a tax-efficient investment which profits from this arrangement. This is how it works. MTM will use a leading scientific authority on forestry management to identify deforested land suitable for planting trees which give the highest carbon yield.

Independently, an environmental lender will offer loans of up to 80 per cent of the amount invested. It is expected that at least 90 per cent of the investment will be available for trading loss relief, resulting in first-year tax savings of 36,000 compared with a net investment of 20,000, assuming an 80,000 loan. The benefit in 2009 from selling the future value of income from carbon credits and forestry could give a return of around 450,000. After the loan is repaid, this would amount to a taxable profit of about 360,000.

With the climate levy tax set at 40 per tonne and carbon credits trading at up to 30 per tonne, it is easy to see why polluters would rather acquire credits than pay the tax.

In a short article, it is difficult to explain all the advantages and risks so it is wise to seek further information from Martin King at martin@silver-planet.com.

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