It is proposed that income tax relief for investors be enhanced as follows:
Rate of income tax relief: 2010/11 – 20%, 2011/12 – 30%, 2012/13 – 30%
Annual maximum investment qualifying for income tax relief: 2010/11 – £500,000, 2011/12 – £500,000, 2012/13 – £1,000,000
These changes will be subject to State aid approval from the EU.
Venture Capital Trusts
The range of companies that can accept investments through the EIS or Venture Capital Trusts is to be increased from April 2012 to include those with gross assets less than £15 million, and with less than 250 employees. At present only companies with asset value of less than £7 million and with less than 50 employees can qualify for these tax favoured investments. The cap on the amount a company can raise through these schemes in any year will also be increased from £2 million to £10 million.
Pension Contributions
The level of contributions that can be made with full tax relief to a registered pension scheme is to be reduced from £255,000 to £50,000 per pension input period (PIP) falling in the tax year. However, this cap can be expanded by bringing forward unused relief from the previous three tax years, up to a maximum of £50,000 from each year. If the annual allowance is exceeded the taxpayer must pay an annual allowance charge on the excess at their marginal rate of income tax.
The Lifetime Allowance will reduce from £1,800,000 in 2011/12 to £1,500,000 in 2012/13.
Individual Savings Accounts (ISAs)
The ISA savings limits applicable in 2011/12 for those over 18 are:
Overall limit – £10,680
Cash up to – £5,340
Balance in stocks and shares up to – £10,680
For those aged 16 & 17:
Overall limit – £5,340
Cash up to – £5,340
Balance in stocks and shares up to – nil
From April 2012 the ISA savings limits will be increased in line with the Consumer Prices Index (CPI) rather than in line with the Retail Prices Index (RPI), as has been the case so far.
Savings for Children
Children born between 1 September 2002 and 2 January 2011 inclusive were eligible for a child trust fund account (CTF). Each child received a voucher to allow the account to be opened which also provided an initial deposit. The existing CTF accounts will continue and funds of up to £1200 per year can be contributed for each child tax free. The CTF account can only be accessed by the child when he or she reaches age 18.
Junior ISA
The Junior ISA is a replacement for the CTF but no funds will be provided by the Government. The Junior ISA will be available to all children resident in the UK who do not have a child trust fund account. It will also have the following features:
No tax will be charged on income or gains earned within the ISA.
Funds placed in the account will be owned by the child and locked in until the child reaches age 18.
Accounts can be opened from autumn 2011 (exact date to be announced).
Sharia compliant products will be offered as Junior ISAs.
The annual savings limits will be announced later, but are likely to be similar to normal ISAs.
Savings and Investments
News: March 2011
Savings And Investments
Enterprise Investment Scheme
It is proposed that income tax relief for investors be enhanced as follows:
These changes will be subject to State aid approval from the EU.
Venture Capital Trusts
The range of companies that can accept investments through the EIS or Venture Capital Trusts is to be increased from April 2012 to include those with gross assets less than £15 million, and with less than 250 employees. At present only companies with asset value of less than £7 million and with less than 50 employees can qualify for these tax favoured investments. The cap on the amount a company can raise through these schemes in any year will also be increased from £2 million to £10 million.
Pension Contributions
The level of contributions that can be made with full tax relief to a registered pension scheme is to be reduced from £255,000 to £50,000 per pension input period (PIP) falling in the tax year. However, this cap can be expanded by bringing forward unused relief from the previous three tax years, up to a maximum of £50,000 from each year. If the annual allowance is exceeded the taxpayer must pay an annual allowance charge on the excess at their marginal rate of income tax.
The Lifetime Allowance will reduce from £1,800,000 in 2011/12 to £1,500,000 in 2012/13.
Individual Savings Accounts (ISAs)
The ISA savings limits applicable in 2011/12 for those over 18 are:
For those aged 16 & 17:
From April 2012 the ISA savings limits will be increased in line with the Consumer Prices Index (CPI) rather than in line with the Retail Prices Index (RPI), as has been the case so far.
Savings for Children
Children born between 1 September 2002 and 2 January 2011 inclusive were eligible for a child trust fund account (CTF). Each child received a voucher to allow the account to be opened which also provided an initial deposit. The existing CTF accounts will continue and funds of up to £1200 per year can be contributed for each child tax free. The CTF account can only be accessed by the child when he or she reaches age 18.
Junior ISA
The Junior ISA is a replacement for the CTF but no funds will be provided by the Government. The Junior ISA will be available to all children resident in the UK who do not have a child trust fund account. It will also have the following features:
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