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A new incentive to get Isas right

It was clear from the moment the Chancellor stood up &#45 or at least from when he first uttered &#34prudence for a purpose&#34, that we had all of our pre-Budget predictions confirmed. This was not going to be a give-it-all-away pre-election vote-winning event. And that was how it was.


Nevertheless, all Budgets create change and, for those of us in the financial services sector (and particularly those who give advice), there are developments we should welcome.


The introduction of Isas has been a difficult birth and while claims of a 40 per cent increase in funds in the first nine months (that is, Isas v Peps/Tessas) looks good, the fact remains that over £8bn of the total £17bn inflow has gone into cash holdings.


There is still massive confusion around mini/maxi so the Chancellor&#39s announcement to extend the £7,000 limit for another year gives us all another year&#39s incentive to get it right. Perhaps the £7,000 should be the normal investment level. I hope so.


It may seem odd to welcome no change around inheritance tax (other than the threshold) but IFAs must be relieved that a Labour Chancellor has desisted from a radical revamp to our wealth tax rules. We may not love them but we know our way around them.


A potentially exciting development is the full write-off on investments in hardware in the pursuit of the development of a healthy e-com business community.


I certainly hope this extends to IFAs themselves for it is clear that, with the speed of take-up of the web technology and the downward pressure on business margins, all IFAs &#45 in the very near future &#45 will require to deal on the web on a B2B basis as a minimum and ideally directly with their clients.


One word of caution &#45 full tax write-offs are always attractive to business but a balance has to stand between short- and long-term planning &#45 and proper pension funding still has to be made &#45 it is not either/or.


We should all welcome the Chancellor&#39s announcements on the minimum income guarantee and the consultation process planned for the next Parliament but, inevitably, there are disappointments and probably as yet unforeseen implications.


The repayment of Government debt will further dry up fixed-interest securities and drive up prices, so annuities will be affected.


Lastly, no news on the age 75 annuities rule is really disappointing. Ah well, he did remove the tax charge on flights from the Scottish Islands. I suppose it was that part of a prudent day. Please pass the sandwiches, Paul Smee, and bring on the beer.

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