Rightly or wrongly the perception of many people is that the Government’s main preoccupation is to find ways of increasing tax. With the inevitable consequence of the recent recession it is true that tax allowances and rates are changing and regular studies report on how this will affect one sector of society or another. It is therefore good to see that rewards are still available for those who are interested in contributing to certain causes that will benefit the country.
One such cause is an investment in an Enterprise Zone. In the early 1980s enterprise zones were identified by the then government as areas within the country which would benefit from regeneration and where such regeneration would enhance both the national and local economies. One famous example of an enterprise zone was the area of London now known as Canary Wharf. Whilst most of the enterprise zone developments have been completed, there are still investment opportunities available in the current tax year.
Those investing in enterprise zones receive tax relief by way of capital allowances. With a combination of direct investment and limited recourse loan a 40% tax payer will be cash positive after tax relief by just under £9,600. A 50% taxpayer will be immediately cash positive by just under £20,000.This apparently “too good to be true” scenario is actually a government backed tax shelter arrangement and completely legitimate.
Unfortunately the current Enterprise Zone scheme runs out at the end of this tax year and although the Chancellor has announced his intention to create more enterprise zones those interested in investing and mitigating their 2010/2011 tax need to act quickly. Further information with regard to this scheme including advice on individual tax positions is available from Newshams and those interested should contact us as soon as possible for an initial discussion.