Tax regime takes AIM
Shareholders faced with some important decisions!

The Chancellor, Alistair Darling announced during his first Pre-Budget Report that he proposed to abolish taper relief from 6 April 2008. This would have the affect of increasing the minimum capital gains tax (CGT) paid on gains from selling certain types of Alternative Investment Market (AIM) shares from 10 per cent to 18 per cent.

The announcement may also lead to some shareholders who had intended on holding on to their AIM shares for more than two years and then taking their profits, to sell them before 6 April 2008.

Mr Darling also announced that he proposed to abolish the indexation allowance, which provides relief from inflation. The allowance, which was frozen when taper relief was introduced in 1998, is set to disappear completely from April 6 2008, increasing the CGT bill for investors who sell their shareholdings after this date.

Under the current regime, people with a portfolio of shares listed on the main stock market would have to pay tax on their gains at 40 per cent if they sold their shares within three years, after which the percentage reduces gradually to 24 per cent from ten years. Following the Chancellors proposed changes future investors would end up paying 18 per cent on their gains. This announcement may encourage some AIM and small company investors to sell their holdings before next April to take advantage of the current lower rates of taper relief

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This article is for your general information and use only and are not intended to address your particular requirements. The articles are based on our understanding as at the 7th November 2008. They should not be relied up on in their entirety. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Articles that make reference to the Pre-Budget Report are subject to the Finance Bill becoming law.
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