Top rate tax payers have only a short time left to take advantage of a Government backed tax mitigation scheme warns Newshams Tax Solicitors. The current scheme which gives tax relief for investments in Enterprise Zone development and which has been running since the early 1980s is due to expire at the end of the present tax year.
Over the years the Enterprise Zone scheme has successfully sponsored such iconic developments as Canary Wharf and created thousands of jobs in underdeveloped areas of the UK. Whilst the Chancellor, George Osborne, announced the creation of new enterprise zones in his speech to the Conservative Spring conference on 5 March, the funding details are still unclear. What is clear is that those wishing to benefit in the current tax year have only a short time left to invest.
Essentially investments in Enterprise Zone developments attract tax relief in the form of capital allowances. This means that a top rate tax payer investing £100,000 by way of £30,000 direct investment and a £70,000 limited non recourse loan will end up cash positive in the tune of just under £20,000. Taxpayers falling within the 40% tax bracket and investing in a similar way can end up cash positive to the tune of just under £9,600.
With Enterprise Zone investments paving the way to regeneration of deprived areas they can be an ideal way for top rate tax payers to help in the revival of the UK’s fortunes whilst mitigating tax.