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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.


Group Relief Rules

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Taper relief should prompt business asset review

The change to business taper relief whereby business assets will attract 75% relief once they have been held for four years compared to the mere 40% relief available after ten years of ownership for non-business assets is a boost for business owners who are contemplating the sale of their businesses. However, the change means that […]

Mig review too late for the start of stakeholder

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Life Policyholder Taxation

The only proposal announced impacting on the taxation of life assurance policies is that changes are to be made to the rules which determine which policies qualify as overseas life assurance business (OLAB). Following consultation, changes will be made to the legislation, with the intention of increasing the competitiveness of UK insurers selling abroad. These […]


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