Last October we alerted you to an online petition asking the Prime Minister to keep Capital Gains Tax taper relief as an incentive to invest in enterprise. So far over 18,000 people have signed this petition. It is open until 11th April so there is still time to sign it. The web address is http://petitions.pm.gov.uk/SaveCGTrelief/.

Almost certainly the proposed changes will take place. There are signs, though, that the government is listening to the protests. Shortly after they announced the changes, they also proposed the introduction of £100,000 retirement relief. Déjà vu for those of us who have been involved in tax planning for longer than a year or two, so perhaps I should rephrase that as “re-introduction???!

It is not only retiring business owners who currently benefit from a 10% Capital Gains Tax rate which is shortly to rise to 18%. Just as a reminder, all of the following share investments currently attract an effective 10% rate:

• in an unlisted trading company (e.g. an AIM investment)
• in a listed trading company where the shareholder owns at least 5%
• in any company by an employee who owns less than 10%

If you or your clients own any of the above share investments, can you avoid paying nearly double the Capital Gains Tax when you sell?

If you were considering selling anyway, then perhaps you should sell now rather than later. Assuming you qualify for full business taper relief any taxable gains this tax year will result in an effective 10% tax bill, whereas if you wait until after 5th April and the proposed changes take place you will pay nearly twice this.

Notice I said now. I did not say on 5th April. My opinion, and it is only an opinion, is that more and more sales of these types of share will take place as we approach the end of the tax year. If I am right, these sales could depress the price of the shares.

If you were not planning to sell, you could still consider making full use of your Annual Exemption. This year you can make a £9,200 gain before paying any Capital Gains Tax. Use it or lose it! So bed and breakfast those share investments.

Remember the “anti bed and breakfast??? tax rule, though. If you buy the shares back within 30 days, the sale and purchase are matched, and you will not use up any of the allowance (unless the share price has dropped in the meantime, in which case there will still be a gain after the sale and purchase are matched).

There are still ways to bed and breakfast tax effectively:

• wait more than 30 days before buying the shares again (but be aware changes in the share price might scupper this strategy);
• have your spouse or civil partner buy the shares;
• if the shares are held as part of an asset allocation strategy, buy shares of another company in the same sector.

Finally, how about “bed and pensioning????

Simply sell the shares to your SIPP. You will still own the shares, but within the tax shelter of your pension. What is more, you will also have cash in hand to the value of the shares! And if you do not need that cash in hand, put it back into your pension, claiming full tax relief on it.

Bed and pensioning can be used simply to take advantage of your Annual Exemption. But you could decide to crystallize the entire gain now at 10% rather than 18%. You do not even need to find a penny to pay that tax bill, as you could more than cover it with the tax relief on the pension contribution.

Before taking any action, though, make sure you are fully aware of the tax consequences. The rules surrounding Capital Gains Tax and taper relief are quite complex. There are a number of traps for the unwary, and sometimes the tax effects of a transaction can be quite bizarre and unexpected. And make sure you account for dealing costs when deciding whether or not your chosen strategy is worthwhile.

I hope you have found this article helpful. Use it for your own benefit and that of your clients. It only takes a few simple ideas for you to demonstrate to your clients that you are head and shoulders above your competition. Keep looking out for those ideas in your in-box.

Adviser Breakthrough Solution takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.