29 November 2000
Merrill Lynch Investment Managers takes the sting out of CGT

Merrill Lynch Investment Managers - Private Investors (MLIM) today launched a unique software package designed to remove the burden of CGT calculations. The new software will both model the tax effect of any transaction before it is made and produce a full UK capital gains tax report. Fund managers and private clients will no longer have to navigate their way through the regulation minefield or spend hours on complex tax calculations before being able to make informed investment decisions.

The launch of this product comes in response to complex new CGT rules introduced by the Government in 1998. In order to make an informed decision on the tax implication of any transaction, the private client or their fund manager must now have detailed knowledge of the taper relief available, the loss offset available and the potential gains crystallised across multiple purchases on a 'Last In, First Out' basis on every stock held in the portfolio.

The MLIM CGT calculation system will be of benefit in two key areas:

The Management of Assets
In today's volatile markets the effective management of assets often depends upon swift decision making. The system's modelling capability allows private investor fund managers to model instantaneously the CGT consequences of any proposed transaction, incorporating all the new tapering rules and enabling the best use to be made of the available reliefs. The CGT system ensures that all investment decisions may be taken quickly and with full knowledge of their CGT implications.

Tax Reporting
The CGT system will enable MLIM to provide, at the end of the tax year, an accurate summary of all investment transactions and the rate of taper applicable to each disposal. In the majority of cases it will also provide the figures to be entered directly into the clients’ tax return.

Robert Dunbar, Portfolio Manager and Director of Merrill Lynch Investment Managers, commented:

"After deciding the parameters for a portfolio in respect of risk, return and the preferred balance between long-term capital growth and income, a fund manager’s prime consideration is to maximise after tax return. In this respect, the most relevant tax to consider has been Capital Gains Tax (CGT). The exercise has been complicated by the introduction of new CGT legislation in the 1998 Budget. We believe that our fund managers should be able to focus on getting investment decisions right without having to work out the tax intricacies of every transaction – MLIM’s new state of the art software provides all the relevant gain calculations at the press of a button, allowing swift investment decisions to be made on behalf of our clients."

Sheila Cook, project implementation manager at Merrill Lynch Investment Managers, commented:

"Having thoroughly investigated the software market, "CGCalc" was the only package we found that provided our Portfolio Managers with the modelling facilities they needed. Implementation of the package went smoothly largely due to EFS's ability to react quickly to changes in our requirements."