The Options for Growth Scheme is a virtual carbon copy of the pounds 45m National & Provincial scheme that was launched and fully subscribed last week. The funds will be used to reduce B&B's repossessions book. The properties will be rented out by a management company for five years and then sold on the market.
Higher-rate taxpayers will get a 30 per cent return after six months - or lower returns annually if the investment is held for longer.
There is no fixed return guaranteed at the end of the five-year BES investment period. But investors can take advantage of four earlier-exit options, each of which in effect offers a guaranteed return. All higher-rate taxpayers will get a 40 per cent tax refund from the Inland Revenue after about six months. They will also have the option of a loan-back of part of their original investment at various stages in the life of the BES.
After six months, higher-rate taxpayers can choose to take out a loan option that will give them 74p for each gross pounds 1 invested. When this loan is added to the tax refund of 40p, investors will get back pounds 1.14 for each gross pounds 1 invested - the equivalent of an annual return of 29.96 per cent. Investors who do not take the six-month exit can take the loan out after one, two or three years - earning, respectively, annualised returns of 22.60 per cent, 17.85 per cent or 16.04 per cent.
All investors in the scheme - whether or not they take the loan- back option - will be eligible for an extra payout at the end of the five-year BES period if the returns are higher than B&B or the sponsors, Johnson Fry, expect. If the returns are lower than expected, then the investors who took the early-exit options will still keep the money they have already received. The 'loan-back' option is in effect a settlement on the original investment, but officially it has to be called a loan to comply with the BES legislation, which demands that BES funds are invested for five years.
Johnson Fry 071-321 0220. Advisers: Allenbridge Group 071-409 1111, BESt Investment 071-936 2037.Reuse content