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Are we alone in wondering why there hasn't been an outcry or press coverage regarding the proposed changes to capital gains tax? Headlines suggest that CGT will increase from 18% to 40% or even 50% which with reduction to annual exemption, no taper relief or indexation takes us back to a level at which investing (of taxed income) becomes very unattractive. Whilst we all await confirmation of the detail when the Budget is presented on 22 June - it has never stopped commentators or lobby interests speculating on the impact of such measures in the past.

Our reading is that CGT of at least 40% will be payable on disposal of listed investments and most other investments making them less attractive to investors. If you hold money in a trust, stocks and shares, unit trusts, oeics, or other assets such as a second property, and even art and antiques -you could be on the losing end of one of the most draconian redistributions of wealth away from you and in favour of the Government.

However, the silver lining is that if we accept the Coalition's stated policy of providing "generous exemptions for entrepreneurial business activities" we can hope that Entrepreneurs Relief will be upgraded and Enterprise Investment Scheme will be untouched or extended ensuring that investments into qualifying companies would continue to be exempt from CGT altogether (if held for the 3 year qualifying period).

In addition, Capital Gains Tax Deferral Relief allowing deferment of tax on a realised gain by reinvesting the profit (and tax due) into an EIS qualified, enables a delay in payment of Capital Gains Tax until eventual exit from the EIS company. The eventual CGT payable will be at the prevailing rate on date of disposal  which one would hope (and pray) would be in 3 or 4 years time at a lower rate than is now proposed. Click Here for more. 
In addition to this main headline, EIS qualified investments continue to qualify for income tax relief of 20% on investment with added ability to offset losses against income tax at highest rate payable.

Since over 80% of the companies we bring to your attention qualify for EIS relief we are reasonably confident that investments into unquoted companies will become much more attractive than quoted ones and should hopefully stimulate employment and recovery by ensuring that the SME sector is vibrant and attractive to investors.

Our London Investment Fair held on 18 May seemed to support this view and attracted a record number of business angels to meet our clients. Early signs are that the November success of nine clients raising over £2m from the event could be exceeded.

Mike Weaver, Beer & Partners Limited