Individual Savings Accounts (ISAs)
From 6 April 2014 the overall ISA savings limit will be increased from £11,520 to £11,880 of which £5,940 can be invested
in cash. From 1 July 2014 ISAs will be reformed into a simpler product, the ‘New ISA’ (NISA) and all existing ISAs will become
New ISA (NISA)
From 1 July 2014 the overall annual subscription limit for these accounts will be increased to £15,000 for 2014/15. Special rules apply if investments are made before 1 July 2014. Investments for 2014/15 cannot exceed £15,000 in total.
Savers will also be able to subscribe this full amount to a cash account (currently only 50% of the overall ISA limit can be saved in cash). Under the NISA, investors will also have new rights to transfer their investments from a stocks and shares to a cash account.
There are also changes to the rules on the investments that can be held in a NISA, so that a wider range of securities to include certain retail bonds with less than five years before maturity can be invested. In addition, Core Capital Deferred Shares issued by building societies will become eligible to be held in a NISA, Junior ISA or Child Trust Fund (CTF).
Junior ISA and Childrens’ Trust Fund (CTF)
The annual subscription limit for Junior ISA and CTF accounts will increase from £3,720 to £3,840 from 6 April 2014. From 1 July 2014 the amount that can be subscribed to a child’s Junior ISA or CTF for 2014/15 will also be increased to £4,000.
The Government has decided that a transfer of savings from a CTF to a Junior ISA should be permitted at the request of the registered contact for the CTF. It is expected that the first transfers will be possible by April 2015.
- prevent VCTs from returning share capital to investors within three years of the end of the accounting period in which the VCT issued the shares
- restrict an individuals’ entitlement to VCT income tax relief where investments are conditionally linked in any way to a VCT share buy-back, or have been made within six months of a disposal of shares in the same VCT
- ensure that HMRC can withdraw tax relief in all cases if VCT shares are disposed of within five years of acquisition.
These changes will take effect from 6 April 2014.
In addition, from the date of Royal Assent, investors will be able to subscribe for shares in a VCT via a nominee.
Seed Enterprise Investment Scheme (SEIS)
SEIS was introduced in 2012 as a way of encouraging equity investment in small companies. This relief was originally introduced for a period of five years and has now been made permanent in respect of both the income and capital gains tax reliefs applicable.
These measures are part of a broader package of changes to support savers. In particular they will increase the choice and flexibility available to savers in tax advantaged products.
Social investment tax relief
The Government will introduce a new tax relief of 30% for individuals investing in equity or certain debt investments in social enterprises with effect from 6 April 2014. Organisations which are charities, community interest companies (CICs) or community benefit societies will be eligible.
The tax relief available to an individual has a similar design to investments by individuals in an Enterprise Investment Scheme company. Draft guidance on the reliefs is expected to be published later this month.
CICs are limited companies that provide benefits to the community and the legal form has only been available since 2005. The reason behind the development of CICs was the lack of legal structures for non- charitable social enterprises. Community benefit societies are incorporated industrial and provident societies where profits are returned to the community for its benefit.
The Government wants to make the UK one of the easiest places in the world to invest in social enterprises.
For more details of the 2014 Budget changes and how these affect you, contact our Chapel Court Wealth Planning Team via your local Burgis & Bullock office on 0845 177 5500.