IR16                                              29 November 1994

        CAPITAL GAINS TAX:  RE-INVESTMENT RELIEF

The  Chancellor  proposes  in his  Budget  to  relax  the conditions 
for investments qualifying for capital  gains tax re-investment 
relief.  The changes will

- abolish the interest in land rule, which limits  the proportion of 
  land or buildings a company can  hold if investment in its shares is 
  to attract relief

- extend  relief to investment in property development and farming 
  companies.

The  Chancellor's intention is to simplify  re-investment relief,   
and   to   extend  the  range   of   qualifying investments.    These
restrictions will no  longer  apply from today.

The  changes  will also bring the relief more  into  line with  the 
Enterprise Investment Scheme (see Press Release IR15)

                         DETAILS

Interest in land rule

1.   Generally, re-investment relief is not available for investment 
in  a  company if, at any time  within  three years  of  the  
investment, the company has interests  in land  worth more than half 
the value of its total  assets (Section   164H   Taxation  of   
Chargeable   Gains   Act (TCGA)1992).  Under the Chancellor's 
proposal, this  rule will  no  longer apply.  A similar change is 
proposed  to the  corresponding  rule  in  the  Enterprise  
Investment Scheme (see Press Release IR15).

Investment in property development and farming companies

2.  Re-investment relief is not available to investors in companies  
engaged  in  certain excluded  trades.   These include   property  
development  and  farming   companies (Section  164I (2)(g) and 
(2)(h) TCGA 1992).   Under  the Chancellor's   proposal,  these  
restrictions   will   be removed.

3.  The cost of the proposed changes is  pounds 20 million in the tax 
year 1997-98


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