Savings and Investment
Individual Savings Accounts (ISAs)
The annual limit for 'new ISAs' was set at £15,000 from 1 July 2014. This rises to £15,240 for the tax year 2015/16.
The Chancellor proposed a significant relaxation of the rules on ISAs, to be introduced later this year following a consultation. At present, any money withdrawn from an ISA can only be reintroduced within the annual investment limits – so a temporary shortage of cash could result in losing the benefit of the tax shelter. It is proposed that savers will be able to withdraw money and then replace it within the same tax year without using up their annual limit. The precise date on which this change will take effect will be announced later.
The Chancellor also announced a new type of ISA, also to be introduced later in 2015 following consultation. This is intended to help people saving towards the purchase of a first home. A Help to Buy ISA can be started with an initial deposit of up to £1,000, and monthly contributions of up to £200 can be added. Interest will be tax-free. When the account is cashed in to buy a first home, the Government will add 25% of the value of the account, up to £3,000 (on savings of £12,000).
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Venture capital schemes
The Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCTs) and the Seed Enterprise Investment Scheme (SEIS) are generous but complicated reliefs for investment in small unquoted companies.
The basic rates and amounts of relief remain unchanged for 2015/16. A number of detailed amendments are being made to the rules to limit or improve their operation. These include:
- requiring that companies must be less than 12 years old when receiving their first EIS or VCT investment, except where the investment will lead to a substantial change in the company’s activity;
- introducing a cap on the total investment received under these schemes to £15m, increasing to £20m for knowledge-intensive companies;
- increasing the employee limit for knowledge-intensive companies from 249 to 499 employees.
The interaction between the schemes will also be smoothed by removing the requirement that 70% of funds raised under SEIS must have been spent before EIS or VCT funding can be raised. These changes are subject to State aid approval by the European Commission.