Tuesday, November 22, 2005

Aiming high

Apparently, Aim (Alternative Investment Market) stocks are increasingly being used as a shelter from inheritance tax, following the extension of tax relief to them in 1996 (FT Money supplement, 1 Oct 2005). I must admit that about four of the companies I am interested in (OK, I've got shares in them) have moved from the main market to Aim in the last few years.

When this happens, they have to be taken out of an ISA or PEP wrapper, if they are held there. Of course, the money can be re-invested in qualifying stocks and the value of that tax shelter is thereby preserved.

Just to clarify something I posted a while ago: 'the anger is directed not against capitalism as such, but against profits going out of France...' This is happening at a high rate at the moment, due to a 'fiscal amnesty' or temporary tax rebate. Hewlett Packard, who were planning 6000 job losses in Europe, of which 1200 in France, announced in August the repatriation of $14.5bn of profits. It is estimated that around $400bn of US companies' profits 'permanently invested abroad' before the end of June 2003 are eligible for the rebate. This is at least twice as much as estimates made when the US Congress voted in the rebate last year (Le Figaro Économie, 5 Oct 2005). There is no suggestion that the US is doing anything unfair, merely pulling back from a double taxation system that excessively encouraged investment abroad.

The FT also mentioned this temporary tax concession, in a leader of 19 Nov, and noted that it may be giving an artificial boost to the dollar. (Remember that one of the things the French were always complaining about back in May was that the Euro was over-valued).


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