Pensions and investments
Life insurance policies
This change affects those who own life assurance policies, capital redemption policies and life annuity contracts. The rules for calculating the amount of gains from the relevant policies and contracts are amended. The changes apply where there have been gains earlier in the life of the policy or contract but the gains were not chargeable to tax under the income tax rules. The changes seek to clarify the rules for calculating the amount of gains liable to income tax. This measure is introduced as a result of HMRC's view that the previous rules were, in some instances, exploited.
ISA annual allowance
The cash value of the ISA limit has increased from £10,680 in 2011/12 to £11,280 in 2012/13. Up to half of the allowance may be saved in cash.
Enterprise Incentive Schemes
The following changes were confirmed today:
- The limits which currently apply to Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) will be increased as follows:
- The employee limit will rise from 50 to 250
- The gross assets limit of £7m before investment and £8m after will increase to £15m before and £16m after
- The maximum annual amount that can be invested in both schemes will increase from £2m to £5m.
- The rules for EIS and VCTs will be simplified so that:
- There will be a relaxation in the rules defining when a person is connected to a company
- The definition of qualifying shares will be widened
- The £500 minimum investment threshold will be removed
- The £1m investment limit by a VCT in a single company will be removed.
- The changes to EIS will be effective on or after 6 April 2012 and the VCT changes on or after 1 April 2012.