Scheme to avoid gains tax

JOHNSON FRY, the business expansion scheme specialist, is planning to launch a scheme that allows anyone who has made a taxable capital gain since the beginning of December last year to shelter it from capital gains tax.

The scheme will be the first specifically designed to exploit new regulations announced in last year's Budget. The rules allow people to reinvest in certain small, unquoted companies without paying CGT on the original share sale. For higher- rate tax payers, this is the equivalent of a 40 per cent interest-free loan for investment.

The reinvestment relief is one of a package of measures introduced by the Government to increase individual investment in smaller companies.

The Johnson Fry scheme will invest in the production of North Sea oil and gas. A bulletin from Johnson Fry said: 'Do not think that it is the same as investing in North Sea exploration. We will only buy known production of oil or gas.'

It adds: 'The investment provides a dividend return of 9 per cent gross.'

Earlier last month, a company was set up to link people looking at large capital gains tax liabilities with companies that qualify for the roll-over investment relief. For pounds 120 a year, Tax Invest will provide interested people with a list of such companies.

Investors will receive offers of investment in qualifying companies, regular updates on progress, including share price performance, and a tax advice helpline. The investor has three years after disinvestment in which to find the right company to reinvest in.

John Woolgar, the managing director of Tax Invest, said: 'We will make sure that the companies qualify for the relief by obtaining a letter from the Inland Revenue.'

He emphasised that the company would not offer any investment advice. One company that Tax Invest has on board is Eastwood Care Homes, a nursing home management company. Companies that invest in property and leasing companies are among those that will not qualify for the roll- over relief.

One other advantage for using the roll-over investment relief is that investment in unquoted companies qualifies for relief from inheritance tax.

Johnson Fry, 071-321 0220; Tax Invest, 0800 556630.