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With the possible exception of an increase in the annual Enterprise Investment Scheme allowance to £500,000 per annum, there was little in the Budget to excite the private investor, says F&C's Jason Hollands.
"Many of the measures in the Budget had previously been announced and there were no major rabbits pulled out of the Chancellor's hat," he notes.
For example, as previously announced the ISA allowance will rise to £7,200. "This is frankly a pretty meagre increase given the allowance has been frozen at £7,000 since inception," says Hollands, "and still a long way behind the PEP and TESSA allowances it replaced."
"Additionally, investors will also be allowed to transfer money saved in cash ISAs into stocks and shares ISAs though I doubt many providers are expecting a rush of activity anytime soon, given the state of markets," he adds.
A further measure in the Budget was the announcement that from April 2009, the requirement for providers to physically receive a CTF voucher from parents before opening an account will become voluntary rather than mandatory.
"This may help to marginally reduce the number of parents who lose the paper voucher as large numbers have done," says Hollands.
"However, there has been no change to the annual £1,200 allowance that can be invested by parents on behalf of their children. The success of the scheme over the long-term won't be the number of vouchers invested but the extent to which parents put their own cash into these plans."
The most significant measure for the UK financial services industry confirmed in the Budget is the new Capital Gains Tax regime. From the new tax year this will see the introduction of a flat rate of 18% Capital Gains Tax which will replace the old regime which includes taper relief and indexation allowances.
Alongside the CGT changes the Chancellor also confirmed that he will introduce a lifetime 'entrepreneurs relief' allowing employees or directors of trading businesses with a minimum 5% in the company to only pay an effective rate of CGT of 10% on their first million pound of gains.
"This is of course the effective rate that all shareholders in AIM and private companies have previously been able to enjoy under taper relief arrangements," concludes Hollands.
13 March 2008 © Moneyextra.com
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