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PBR: CGT decision could offer tax opportunity for investment firms

The introduction of an 18 per cent flat rate for Capital Gains Tax could give investment firms the green light to launch new capital based investments to attract clients, according to Mazars Financial Planning CEO Paul Willans.

Willans says that although the full details have yet to be divulged the move will allow investors to take money out of cash deposits – that could be paying as much as 40 per cent income tax – and place them in investments that can offer returns of up to £9,200 a year as of April 2008, whilst paying the standard 18 per cent CGT on the remainder.

He says: “This will be manna from heaven for the UK’s investment industry, who will seize this, perhaps unintended loophole, and will be creating low-risk investments that will be subject to CGT rather than income tax. Of course, capital based investments may not be suitable for widows and orphans, but the potential for halving the tax burden will make an element of volatility acceptable to most investors.”

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